Spiralling interest rates, soaring inflation and rocketing mortgages have created a “perfect storm” which will result in another five per cent drop in prices by Christmas.
That’s the stark warning from industry commentator Jonathan Rolande, from the National Association of Property Buyers.
He says: “I think we are likely to see a further five per cent eroded from sale prices this side of Christmas. Those who are employed within the property sector should be concerned not so much with price falls, but instead by the reducing sale numbers.
“This is starting to indicate a shift in the market where many homeowners are opting to wait and see what happens to the market and interest rates, and those that are trying to sell are not yet reducing their prices by enough to encourage the smaller number of buyers now looking.
Outlining how he thinks the rest of this year will develop, he adds: “The second half of 2023 looks to be quite bleak for many estate agents who will be unable to build up the financial reserves needed to see them through what is likely to be an even more challenging winter market.
“In the rental markets further rises in borrowing rates look likely and the supply of rental property is likely to reduce as landlords sell and aren’t replaced with new entrants, challenging times lay ahead for tenants. Expect further rises in rents although at a slower rate than we have witnessed. We will soon reach a point where further steep rises simply aren’t sustainable.”
Rolande’s comments come as a report revealed that buyer interest, sales and property prices suffered in June as mortgage rates continued to rise.
June saw new buyer enquiries reach an eight-month low, pointing to a 'renewed deterioration' in the UK sales market, the Royal Institution of Chartered Surveyors said. Property prices continued to slow in June and many estate agents surveyed by Rics think further falls could be on the cards in the coming months.
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Well near me nothing is coming up for sale and what is, is not selling 🆘🆘. This is clearly the start of a sustained drop.
Some stuff had been massively overpriced when it was listed. For at least 18 months asking prices and sale prices have been adrift.
A couple of houses near me indicate the gap.
Small 3 bed semi listed in December 2021 for £310000 completed in October 2022 for £292500. It was priced slightly over comparables and was cosmetically tired so room for a 5% drop was already built in to the price.
Four bed detached listed in June 2022 for £595000 eventually completed last week. The asking price had dropped to £550000 so presumably it went for less than that. I actually own an identical one in the next street and had it valued for remortgage purposes in May 2022. That valuer reckoned £450000. So even with a price drop the sold one has done very, very well.
The valuation is the bit the media often overlook. Estate agents can list any price they optimistically dream up. Sometimes a valuer will agree with it, sometimes they won't.
The SDLT holiday pushed prices up by 25% in some place so even with the drops we are now seeing, most people will have done very well with houses prices if they bought before 2019.
The people in trouble are those who bought at the height of the boom on a 2 or 3 yr deal, stretching to the max. Double whammy of drop in house value & huge increase in mortgage rates :(
The lefties who want to wrap renters in cotton wool forget the huge risks which buyers have to take as it's not always possible to time buying and selling to optimise market changes.
Build in mortgage costs trebling, expensive stamp duty, legal and estate agency fees etc. and renters are enjoying real bargains with real terms rent reductions and minimal moving costs.
Only 5%. More like 15%. Before I thought no more than 10% but have now revised this.
Bank of England are in charge of this, seen it all before back in the late 80's, but now I understand it a lot more.
B of E should back off now and let the rates they have so far increased start to bite in, but of course they won't and house prices will come down.
I am doubtful there will be a crash though, as some hope!
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