Research from a number of bodies indicates that Q4 2023 is set to remain challenging for the property sector, but that there is an overall sentiment that there is some “stabilisation” in the market.
The latest Residential Survey from The Royal Institution of Chartered Surveyors (RICS) indicates that sentiment amongst members surveyed suggested that both sales agreed are down, and new buyer enquiries are down; with supply set to remain largely unchanged as the number of market appraisals remains below that of September 2022.
Commenting on their September survey, Tarrant Parsons, Senior Economist at RICS, said:
“With mortgage affordability still incredibly stretched, it is unsurprising that buyer activity across the housing market remained subdued in September. Although the decision to pause monetary policy tightening a few weeks ago provided a glimmer of relief for the market, interest rates are likely now set to remain on hold for a prolonged period. As such, it appears there is little prospect of trends deviating much from the recent picture in the immediate future. That said, the outlook a little further ahead has improved slightly, with twelve-month sales expectations moving out of negative territory for the first time in several reports.”
House prices continue to fall and the latest Rightmove House Price Index showing that buyer activity levels remains significantly lower than during the post-pandemic market frenzy. The number of sales being agreed is now 17% down year on year. Estate agents are saying buyers are still active for the right property at the right price,
“In a market that agents describe as the most price-sensitive ever, buyers are likely to be on the look-out for homes that they feel represent excellent value, and to attract one of these motivated buyers, sellers need to price right first time. If similar nearby properties for sale appear overpriced, serious sellers have an opportunity to stand out from the crowd with a more competitive price and attract immediate buyer interest that our research shows significantly increases the likelihood of finding a buyer.”
says Tim Bannister, Rightmove’s Director of Property Science adding that a more stable mortgage market is providing some home-movers with more confidence about what they are likely to be able to afford. In the last year, the average house price to earnings ratio has also decreased by close to 10%, meaning that buyer affordability, while still stretched, has improved compared to this time last year. Meanwhile, average fixed mortgage rates continue to trend downwards and have now fallen for 11 consecutive weeks,
Responding to the latest stats from Rightmove, Nathan Emerson CEO Propertymark comments
“A decrease in house prices compared to last year is inevitable, natural and needed in order to get back to sustainable and achievable levels since the drastic spike seen over the past couple of years. Our own reports indicate a healthy interest in property with demand and stock levels remaining buoyant, so it is positive that Rightmove reports the same positive trend when compared to pre-pandemic.
“We hope that buyers are looking at the market confidently and continue to find an affordable middle ground. It is proving to be a good time to buy and sell.”
The sentiment chimes with the latest market report from Street.co.uk which also shows a reduction in property sales, and predicts a similar story for Q4 where it’s modelling suggests sales agreed could be 15% below the five year average next quarter, likely ending the year not too dissimilar to the performance seen throughout the year; but similarly suggests that property priced at the right level will still sell.
“The regions experiencing the most significant drops in sold properties are also the regions with the highest average house prices – highlighting greater market stability in areas with a higher number of lower-priced properties.
says Heather Staff, Co-Founder of Street.co.uk.
“Higher mortgage rates appear to have a more pronounced effect on buying power in the South, where house prices are highest. As budgets are squeezed, mortgage costs rise and savings diminish, buyers in high-value regions face greater challenges. In contrast, lower-value housing markets in regions like the North East and North West are faring better under these conditions, where buyer’s budgets can go further.
“However, the Bank of England also stated housing remains one of the signs of weakness in the economy with investment down 7.7% year on year and falls in both prices and transactions. The pause in increasing the base rate has provided a much-needed break for the industry, allowing time for some confidence to return. The effects aren’t likely to be immediate and seasonality will likely dictate the direction of sales agreed for the rest of the year, but we might see a rise in new listings as optimistic sellers look towards home moving in the New Year.”
