As Rishi Sunak settles in to do a repair job on our economy, he will struggle to prevent house prices heading south in the next year. The ’mini-budget’ of his predecessor has brought the slow down into sharp focus and no amount of spending cuts will bring confidence back to the markets.
We have already seen cheap fixed rates disappear from the mortgage market to a point where brokers are recommending variable rates, which are still significantly higher than the sub 2% rates we have been used to. Graham Cox, founder of the Bristol-based broker SelfEmployedMortgageHub.com, said “October 2022 will go down as the month the property market became a buyer’s market. However, due to the time lag between transactions being agreed and the Land Registry reporting completed sales, the true extent of house price falls, for several months yet, will be masked by declining year-on-year property price growth. Early next year is when it will become obvious the market has turned and house prices are actually falling sharply. A drop of 20% or more over the next 18 months is quite possible.”
Swindon-headquartered Nationwide said strong labour market conditions, a shortage of properties and a significant chunk of borrowers on fixed rates could soften the landing – but the market looked “set to slow” in 2023.
Sarah Coles, senior personal finance analyst, at Bristol-based investment platform Hargreaves Lansdown, said a slowdown of the market was “on the cards” even before the mini-Budget as interest rates climbed and household bills mounted amid rising inflation. “They were all bound to put the brakes on runaway house prices eventually. There’s the chance that this is what we’re seeing right now,” she added. “Given the backdrop of a stuttering economy, there’s the risk that the confidence and optimism that is the engine of house price rises could be more seriously broken.”
We are looking at buying in the current market, but we are seeing prices well above the ceiling on the street and wonder when agents and sellers are actually going to smell the coffee and realise it is more bitter than sweet.
If you are keen to move before house prices move south, then contact us for a fair reasoned estimate of what your property is worth.
