Survey Hut give reasons to be positive, despite the doom and gloom in the economic and housing data for January 2023
What goes up must come down is an interesting adage for property.
I’ve seen some instances of this in my career in the property world.
In the 2010’s restaurant groups couldn’t take space quick enough. They piled into town centre units with abandon. There was no thought as to whether there were enough people to fill them all.
In the early 2000’s mega supermarkets were all the rage. You couldn’t build them big enough for all the products they wanted to sell. Supermarkets have been splitting these bigger units or leaving them entirely for years.
In the 1990’s and early 2000’s out of town retail became hot as developers realised, they could build a warehouse and get 10 times more rent from a retailer. There’s now not enough retailers to fill many of these developments.
Why do I mention these? They came to mind recently when I was thinking about the residential property market.
There is much doom and gloom with the state of the market. And there is certainly cause for concern.
House prices on average are going down, figures from Nationwide give a 0.6% drop in January 2023, pushing the annual price growth to 1.1%. Average prices are now 3.2% below Augusts peak.
The Bank of England statistics for mortgage approvals for house purchasers paint a grim picture. Approvals in December decreased to 35,600 from 46,200 in November. This is the lowest level of approvals since January 2009 (32,400), if the Covid 19 pandemic and immediate aftermath are excluded.
The well-publicised increase in the cost of mortgages, widespread strikes and the cost of living crisis is leaving less money in everyone’s pocket.
However, in relation to interest rates and cost of living, what goes up must come down.
The rate for a 5 year fixed mortgage from Natwest is being offered at 3.99% with a 40% deposit. This is below the Bank of England Base Rate, so you can see which way the bank is thinking rates will go in the medium term. This rate is down from a high of 6.5% in October 2022.
Data out also confirmed the UK avoided a recession in the last quarter of 2022. The UK was the fastest growing economy in the G7 last year.
The job market continues to defy expectation which means there are limited redundancies, which can precipitate a housing price crash.
There are hopes that as inflation drops throughout 2023, economic growth might gain momentum and confidence to move to a new home increases.
So keep the faith and believe things are on the way down!
If you’re buying your new perfect home, Survey Hut would be delighted to survey it to check for unknow defects to give you peace of mind. Get in contact.
