"Gains achieved in the market in recent times mean that for the majority of sellers a reduction in asking price is unlikely to translate into a financial loss when compared to the purchase price"
Nicky Stevenson, MD of Fine & Country, shares her thoughts on what has been happening: “The Bank of England indicates that December mortgage approvals, at 35,600, were at their lowest level since the Global Financial Crisis, down by nearly a third quarter on quarter. However, Rightmove report the number of prospective buyers contacting agents at the start of the year was up 4% compared to the last ‘normal’ market in 2019. The start of January was also the third busiest day on record for property valuations, considered a sign of future demand."
She adds that by the end of January, the swap rate had pared back to 3.8%, its level of early September. Although the base rate of interest has just risen to 4%, it looks likely to stay below 4.5%.
Stevenson says: “These factors, together with the latest forecasts for the UK economy, mean that mortgage approvals are likely to settle somewhere above December’s level. There are signs too that inflation has peaked, and the latest independent forecasts for the UK economy released by HM Treasury paint a tentatively more optimistic picture, with the economy now expected to contract in 2023 by less than 1%."
The rate of house price growth continues to moderate. Nationwide reported annual price growth in January fell to 1.1%, down from 2.8% in December, and all major indices indicate month-on-month marginal falls in prices.
Stevenson comments: “This contrasts with new seller asking prices which rose by 0.9% in January, the equivalent of £3,301, however, they are over £8,000 lower than their peak in October. With the market of 2023 set to be dominated, at least in the short term, by needs-based buyers as opposed to discretionary buyers, price sensitivity will be key to securing interest and offers, with the supply/demand pendulum likely to swing back in the favour of buyers.
"As many have commented, gains achieved in the market in recent times mean that for the majority of sellers a reduction in asking price is unlikely to translate into a financial loss when compared to the purchase price, rather sellers need to ensure their aspirations align to current market conditions.”
Focusing specifically on the prime sector, Stevenson says that year-on-year price growth in the premium markets is currently outpacing the wider market.
She notes: “The 10.8% annual price growth continues to be fuelled by high-value activity in London and across the South. At £851,000 the prime market price threshold has risen by over £125,000 compared to January 2021."
According to Stevenson, the recently released data from the 2021 Census indicates that there are close to 25 million households in England and Wales, of which 62% are in home ownership. This is down from 63% in 2011.
Stevenson concludes: “Such properties are either owned outright or owned with a mortgage or a loan. Mortgage status that has been recorded by the census since 1991 and Census 2021 marks the first time the data has shown that a greater proportion of homeowners are now mortgage free, at 53%, up from 47% in 2011.
"Wales and the South West boast the highest proportion of mortgage-free homeowners of all regions of England and Wales, while only in London is the proportion lower than 50%."
