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Ben Stephens, Senior Property Partner, shares his thoughts on the current position of the property market and what the coming months may bring.
Three weeks into the new year and the most frequently asked question is “How is the property market shaping up in 2023?”
The reality is, perhaps, very different than my expectations only three months ago. Rewind to October 2022 and, following Liz Truss’s 44 days in power coupled with a disastrous mini-budget, we saw the average two-year fixed rate home loan surge to over 6% for the first time since 2008. This event, along with the wider economic environment, fed into an already softening housing market. Thankfully, Jeremy Hunt’s subsequent actions have stabilised the mortgage market, with two-year fixed rate loans now available at around 5%.
The final quarter of 2022 clearly saw a change in the market, with Halifax reporting in December that the average UK home cost 1.5% less than the previous month, and annual growth slowing to +2%. Let’s not forget that both 2021 and the first half of 2022 saw rapid price growth and that the average house still costs 11% more than it did at the start of 2021.
As we enter 2023, Stags can report a healthy level of buyer enquiries, viewings and agreed sales. According to Rightmove, Cornwall and Devon remain the second and third most-searched locations in the UK. There is undoubtedly evidence of price sensitivity, however, those properties that are correctly positioned will quickly attract interest and offers. A prime example of this is Oak Lodge at Perranwell Station near Truro, that was launched by Stags Truro office with a guide of £1,200,000 and found a buyer within just 10 days.
Those vendors and agents with ‘historic price expectations’ are having to quickly adjust or face weeks without activity; please bear in mind when setting your guide price that the first two weeks of marketing are crucial. A professional agent will advise on all aspects of your sale and a sensible early offer is one not to be dismissed, after all, buyers now have a greater choice. If you are also buying in the same market, then any shortfall can often be made up. These signs are all evidence of a return to a ‘normal market’ that many of us can vividly recall before 2020.
Last week, the Bank of England released mortgage approval statistics for November, with those for house purchase coming in at 46,100, some 11,800 less than October and the lowest since June 2020 (40,500). This prompted me to look at the structure of house ownership in the West Country according to the Office of National Statistics. The average rate of overall home ownership in the South West stands at 67%, with around 44% of those owning their home outright, without a mortgage. The broader market is seeing a variation between mortgage-dependent and equity-driven sub-markets and this may well help to underpin sales in the West Country as we move through 2023.
None of us can be certain exactly what lies ahead and it is clear that both buyers and sellers will remain cautious. Even if prices fall back by 8% over the course of the year, this would mean the cost of an average property returns to April 2021 prices; still significantly ahead of pre-pandemic levels. Vendors who are professionally advised and supported by an experienced team can achieve their goal of moving.
Our agents understand their local markets and will provide straightforward, informed advice on buying and selling property in the West Country. Please contact your local Stags office here.
