Turmoil in UK Government policy and changes made by Bank of England are causing uncertainty in the housing market.
“The property market is in turmoil.”
“Mortgage costs to go up by £5,000 a year.”
“Property crash on the way.“
”Interest rates 10% by the end of the year.”
“England to win the World Cup”
Just some of the recent headlines about the property market following the recent mini budget at the end of September (unfortunately the last headline is still completely fictional!)
Reading these would have you running for the hills and worried about the future. But do the figures back up the news stories?
Data from Rightmove covering the time since the mini budget paints a different picture:
- Sales falling through at similar level to 2019.
- 4% increase in new properties being listed for sale.
- 1% increase in asking price reductions.
- The number of sales with a price reduction at 23% which is lower than the 5-year average before the pandemic of 32%.
- 12% drop in people enquiring to view properties.
- No change in the number of sales agreed to the two weeks before the mini budget.
Read the full article from Rightmove here.
It is difficult to see the direct affect the mini budget is having on house prices because the data lags the market. Nationwide Building Society’s data says prices stayed the same in September.
A major factor that affects house values is the availability and cost of mortgages. Lenders have pulled a lot of mortgages and put interest rates up since the mini budget. They have been worried the Bank of England will be forced to increase the base rate further, already recently raised to 2.25%, to temper inflation and combat the weakening of the Pound. The cheapest mortgage rates are now more than 6 times higher than the lows of 0.79% in October 2021.
James Raspin, Chief Surveying Officer at Survey Hut commented,
“The increased cost of borrowing is undoubtedly going to affect house prices as buyers can afford less. However there are no signs of forced sales which are big pre cursors to a price crash and 30% of the market are cash buyers who aren’t affected by mortgage rates. We need to be careful not talk ourselves into a property crash and recession.”
Get in contact with Survey Hut for residential valuations and pre purchase surveys.
