Over the last decade, we’ve been used to a steady rise in property values, notwithstanding the occasional blip, the market returned to its upward trajectory. However, there are now signs that we are moving into a period of stagnation or even falling prices. With the recent interest rate rise, the cost of living crisis starting to bite, and dark clouds gathering on the international horizon, many buyers are choosing to wait either in the hope that prices fall further or until their own personal circumstances feel more secure.
A Buyers Market?
After a couple of years of good growth, the last four months of 2022 saw values tumble as buyer volumes began to reduce. November alone saw a fall of 2.3%, the biggest monthly drop in 14 years, according to the BBC. It is expected that average house prices will fall 10% across the country, with regional variations. Unsurprisingly the overheated London market will see the biggest fall of 12.5%, while areas such as the North West and Wales, where very large mortgages are not such an issue, can expect a more modest reduction of 8.5%. With interest rates expected to peak in 2024, we are likely to see a return to normal only after then
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The Impasse
The problem seems to be that after a period of good growth, some sellers have an inflated idea of their property’s value, without taking into account the realities of the current market. It is tempting to check out the prices of similar properties, but often these houses have remained unsold for a while and the actual sale price achieved may fall far short of the asking price. The old adage that something is only worth what somebody is willing to pay you for it holds true here.
The best advice for sellers is to be patient, talk to estate agents, try to understand the market and how it relates to your particular area and property, as well as regional variations. Certain types of properties will be affected more than others and some inside knowledge is vital here. For buyers, it’s a similar story, if you can wait, then it’s probably wise to do so with falling prices predicted. Of course, some buyers cannot wait and the consolation is that rises are predicted to resume in 2024, so in the longer term, it should still be an investment. Don’t forget to factor in all the associated costs and obtain conveyancing quotes from specialists such as those seen here: https://www.samconveyancing.co.uk/conveyancing-quote.
Can the impasse be broken?
The principles of supply and demand are very much in force in the housing market. The nature of planning and housebuilding means that sometimes they are slow to align but they generally work themselves out in the end. Most experts are predicting that as the economic picture brightens and interest rates stabilise, buyers will return to the market. Modest growth of around 2% to 4.5% is predicted by 2025, rising to 5% to 6.5% in 2027.