"With the ratio of new sales to new instructions returning to pre-Covid levels, the demand/ supply imbalance that fueled price growth is correcting"
Stevenson comments:
“Current housing market metrics point to a mixed picture for the housing market. Sales volumes in February were some 9% lower than the pre-pandemic average, although with average conveyancing times in the region of 12 to 16 weeks, this reflects the market in the immediate post-mini-budget period. Both Rightmove and Zoopla report that as spring takes hold, demand for property remains above pre-pandemic levels."
Although mortgage approvals are significantly lower than previously, the 10% uptick in approvals between January and February marks the most significant increase at the start of a year since 2011.
Stevenson adds: “The middle of March saw average two-and five-year fixed-rate mortgage deals at six-month lows and although the Bank of England raised the base rate of interest to 4.25% on 23rd March, there has been little change in the 5-year swap rate, indicative of longer-term stability in the market.
“According to Moneyfacts, product choice for first-time buyers, home movers and buy-to-let investors has risen recently, with rate competition between lenders intensifying, especially for those with lower loan-to-value (LTV) ratios and who are looking for longer-term fixed-rate options.”
According to Stevenson, there were few surprises announced in the Chancellor’s Spring Budget with housing per se absent from an agenda which focused more centrally on boosting employment and enterprise.
She says: “More pertinent were the official forecasts released to accompany the budget by the Office for Budget Responsibility. The UK economy is now predicted to contract by just 0.2% over the course of 2023 and is technically set to avoid recession, while interest rates are expected to peak at a level lower than the 5% forecast less than six months ago.
"Although the rate of inflation rose unexpectedly in March to 10.4%, cost-of-living rises are set to ease. This is partly due to the government’s energy price cap guarantee being extended until June and the rate of inflation forecast to fall sharply to 2.9% by the end of the year.
Despite Help to Buy ending on 31st March, no new schemes to support home ownership were announced, although as part of the government’s Levelling Up agenda twelve new investment zones across the UK will be created. This will support house price growth in these areas over the medium term.
Stevenson comments: “With the ratio of new sales to new instructions returning to pre-Covid levels, the demand/ supply imbalance that fueled price growth is correcting. Nationwide report that average property prices fell by 3.1% in the year to March, however, they remain 17% higher than when the country went into lockdown three years ago. Over the past year, properties in the upper echelons of the market remain resilient with prime prices rising by 9%. That said, sensible and realistic pricing is still paramount to achieving sales success."
She concludes: “Rightmove report that activity levels for smaller properties, so those with two bedrooms or less, are just 4% lower than in the last ‘normal’ market of 2019, while sales volumes for larger properties are lagging by 10%. With tighter budgets, buyers also appear to be more conscious of property conditions. According to a Dataloft poll, ‘ready-to-move-in’ is the most sought-after feature for current buyers, ranking above the garden or homeworking space demands that typified the post-pandemic market."
