"There has certainly been some realignment in house prices, but this has encouraged people back into the market, with many able to buy larger properties than previously or do so with a smaller loan"
June saw the number of sales increase by 11% on May’s figures. New instructions increased by 12% compared to the same month last year, also up 8% compared to May 2023. Furthermore, the number of valuations undertaken increased by 6% annually, a 5% monthly increase.
LRG registered 41,342 new buyers during the first half of 2023: over 1,600 on average per week.
Kevin Shaw, National Sales Managing Director at LRG, said: "Despite the interest rate rise and other challenges, we have seen an increase in activity for valuations, instructions and sales agreed, indicating that there is still significant potential in the market. With net sales up by 11%, June’s sales are more positive than May’s and we hope that trajectory continues throughout the summer months.
"There has certainly been some realignment in house prices, but this has encouraged people back into the market, with many able to buy larger properties than previously or do so with a smaller loan.
"We haven’t seen a spike in fall-throughs despite the mortgage rates rise. Over 20% of people purchase a property without a mortgage and many more have very low loan-to-value rates, making the interest rates rise less significant for them.
"There have been some delays on exchanges due to sale prices being renegotiated, but despite this, our net sales, by volume, are up compared to May."
The impact of rising mortgage rates
The increase in interest rates, specifically the anticipation of more to come, has had an impact on both LRG’s sales and its mortgage division, Mortgage Scout.
Kevin Shaw explains: "Homeowners who have a good fixed rate agreed in principle will be keen to move before their offer expires. Also, there are many people who bought a property when stamp duty was temporarily suspended in June 2021. Two years on, those people will be keen to fix a new rate before mortgage rates rise further."
Sarah Thompson, Managing Director at Mortgage Scout, adds: "We have had an exceptional Q2 with the number of new mortgages and remortgages and have been pleased to be able to provide reassurance our clients and guide them through this tricky mortgage market. Consideration such as fitting a new mortgage into their budget, considering overpayment and reviewing monthly budgets has never been more important than in the current market."
Auctions
Uncertainty over mortgage rates has a similarly positive impact on activity in the auctions market, as purchasers look to speed up their purchase before rates climb further. In its June auction, First For Auctions saw a 68% success rate and the company has made sales of £31 million so far this year.
Daniel Gale, Head of Auctions at First For Auctions, said: "In a market laboured with interest rate rises and protracted economic uncertainty, our auctions in Q2 showed promising signs of stability, receiving interest from over 3,500 potential buyers.
"Due to household budgets remaining under pressure from high inflation, the trend since the start of the year has been for vacant residential freehold property, still regularly outperforming occupied investments as buyers look for more flexible, competitively priced opportunities.
"In addition, our online auction format, an ‘eBay for property’, has been an invaluable tool in this market, permitting sellers access to the widest possible audience, unrestricted by the location of a traditional saleroom."
Corporate sales
LRG’s Corporate Sales team, which provides services including part exchange sales, assisted sales property disposals, asset management and property portfolio sales, has seen increased activity both year-on-year and month-on-month. Valuations rose 60% compared to H1 2022; new instructions rose 68% and net sales rose 16%.
Paul Johnston, Head of Corporate Sales at LRG, comments: "We are continuing to see considerably greater demand from part exchange clients and while we are seeing some investors wishing to exit the market, we also have new clients who wish to either enter the market or expand their current portfolios.
"Overall, we are finding that even with the current economic outlook, property continues to be a sound investment for the long term and whilst builders are building, sellers are increasingly coming to us for local expertise to move part exchange and assisted move transactions forward."
New homes
LRG’s New Homes division has had a busy quarter, selling over 150 plots, which is comparable with Q2 2022. The value of new homes sold so far in 2023 is over £120 million.
During Q2, 21 new sites have been added to the New Homes team’s books, most of which will launch at some point this year. This has added an additional 295 plots to the stock to be sold during 2023 in addition to further phase releases on larger developments that the team is already acting upon.
Tim Foreman, Managing Director of Land and New Homes at LRG, said: "Considering the turmoil in the mortgage markets and the general slowing of construction, sales figures are looking very positive.
"Our average sale price for new homes has remained almost identical to last year which is positive considering that house sales overall are being reduced in price to a greater extent than this time last year. This is partially due to the increased popularity of new homes thanks to their greener credentials and lower running costs.
"Our developer clients are becoming more imaginative with incentives to attract purchasers and in many cases are assisting increasingly with moving costs or offering part exchange to complete chains and offer the security of purchase."
What does the second half of the year hold for property sales?
Kevin Shaw, comments: "Looking ahead, we don’t expect to see significant change over the summer months.
"Sellers and purchasers who are motivated to move by Christmas will need to bear in mind the slightly slower market and start planning for the move imminently. Typically it takes three weeks to get the sale underway and then four months for conveyancing. Of course, sales can go through quicker but for those looking to be in their new home by Christmas 2023, now is the time to start the process.
Kevin concludes: "We expect further interest rate rises in the next couple of months to result in a similar pattern. But interest rates may begin to decline in the new year as the Government and the Bank of England tackle inflation and try to encourage a more buoyant economy in the run-up to next year’s general election."
