House prices and property sales in the West Country

We are flooded with reports, statistics and opinions today that hit us from all angles, but who is right and who is wrong, does it matter? 

What we know is that “according” to the latest Halifax report house prices across the UK fell by 1% for the first time in six months, bringing the average UK house price down to £288,430… they say due to high mortgage interest rates that hamper affordability for would-be buyers.
 

We must put all of this into perspective – what are high interest rates? did we really believe and expect that The Bank rate would remain at those historically unrealistic levels of less than 1%, which they did for 10 years or more?  Of course, not – If we go back 20 years the highest interest rate is 5.75% in 2007 and the lowest 0.10% in 2020 – therefore the average over this period is a little over 3%

At present the Bank rate is 5.25% - however buyers can obtain 5-year fixed rates from as low as 4.24%- and 2-year fixed rates from 4.69% (all subject to terms), therefore we can see that the present rates are really not that far adrift from historic average rates and clearly the wider picture looking at present fixed rates is that longer term rates are expected to fall further – our expectation is late Summer.

Now what of house prices falling! To begin with let’s not get taken in by the dramatic “eye catching” press story that “house prices fall again” message! It is all relative in the vast majority of cases, if one sells for 1% less, one will be buying for 1% less – it is as all relative, lose in one hand – save in the other! The change is marginal.
We should also remember that house prices still remain higher year on year, given the growth in house prices in the post COVID years. In real terms house prices have remained resilient given all of the negative press in recent times – because we like to own our homes in the UK.

With the above in-mind this slight adjustment down is not a bad thing, as it will help the market move and continue to build on the positive sentiment that many agents are seeing in the early Spring months. The UK housing market is build on confidence and emotion – this is how many buyers take their decisions and we are already seeing first time buyers, YES first time buyers who can afford to buy and are accepting of the new “normal”, having not experienced the extreme low rates of past years.
 

Anthony Codling, Managing Director of equity research at “RBC Capital Markets” is optimistic.

“Mortgage approvals are increasing, wages are rising and in our view mortgage rates are more likely to fall than rise in the coming months, therefore looking forward we believe the housing markets glass to be half full rather than half empty
“Once a rate cut appears firmly on the horizon and more mortgage rates start with a 3, we expect stronger demand to push UK prices 3% higher this year.”

Iain McKenzie, Chief Executive of The Guild of Property Professionals 

“News that house prices may be slowing contradicts the current heightened sense of activity in the market, but other lenders such as Nationwide are also seeing the same trend,” he says. “The property market is still in recovery, and we are likely to see ebbs and flows through the year as buyers navigate challenging living costs.

“The healthy level of mortgage approvals is a far cry from the position at the start of last year, and it is encouraging to see that buyers are finding it easier to get lenders on their side.

“We anticipate that the coming months will see demand increase further still. Buyers typically prefer to move during the warmer months, and in turn this will increase competition and bolster house prices.”

Jason Tebb, President of OnTheMarket, adds: 

“Activity continues to pick up with more enquiries and stock coming to market, as you would expect at this time of year. Buyer confidence is further boosted by cheaper mortgage rates and the expectation that they will come down further.

“However, any price rises will be tempered by what buyers can afford. After many hikes in base rate before it stabilised at 5.25%, borrowers are having to get used to paying more.”