New market analysis has suggested that buyer demand levels were on the decline in the third quarter of 2022 as the harsh economic climate begins to tighten its vice on the property market and consumers.
The Hotspots Demand Index monitors homebuyer demand across England on a quarterly basis. Current demand is based on the proportion of stock listed as SSTC as a percentage of all stock listed for sale, so if 100 homes are listed and 50 are already sold, the demand score would be 50%.
The latest index shows that across England, buyer demand is currently at 57% which marks a -5% decline since Q2 2022 and -7% decline since this time last year, suggesting that the long-lasting pandemic market boom might finally be fizzling out under the pressure of economic difficulties.
The worst hit places are Cornwall (-19%), Herefordshire (-15%), and Lincolnshire (-14%). In fact, only three regions of England are reporting positive annual demand growth. These are the City of Bristol (7%), City of London (4%), and Greater London (1%).
As for quarterly changes, the only place to report positive growth is the City of London, up 1%, while all other regions have seen demand drop. The biggest of these drops are found in Worcestershire, Cornwall, Northamptonshire, Leicestershire, and Bedfordshire, all of which are reporting demand declines of -8%.
“[The] red hot market conditions have started to cool under the significant weight of economic difficulty coupled with a very real cost of living crisis,” said Colby Short of GetAgent, who produce the index.
With regards to the outlook, Short said:
“We’re yet to see what effect Liz Truss’s new wave of stamp duty tax breaks is going to have on the market. There is a chance the measures will, once again, fuel a market boom. And while it’s unlikely that the boom will be as big as it was during the SDLT holiday, the tax relief might be enough to persuade some people to pursue their homebuying aspirations despite the current economic climate.
That said, we simply can’t ignore the fact that many lenders have already started to withdraw some product offerings in anticipation of further interest rate hikes, and this will undoubtedly stifle the level of buyer activity seen across the market for the foreseeable future.”
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