Low demand and growing supply are the current challenges facing the mortgage market, which is going through a difficult time.
Despite difficult circumstances, the forecast offers chances for several market segments.
According to Kundan Bhaduri, a property developer and portfolio landlord at The Kushman Group, well-priced houses are selling without a doubt, and there is a tonne of competition from purchasers around.
In a housing market that is notably pushed by high inflation, real-term wage stagnation, along with the customary anti-landlord rhetoric and legislation, Bhaduri said, “the current economic landscape also offers a brilliant opportunity for portfolio buyers to rapidly acquire distressed stock.”
Bhaduri noted that in 2022, the average home price in Wales rose by 13.9%. The yearly price increase of 7.3% brought average property values in England to £304,8673, he continued, and house prices had increased by an average of 0.9% since May 2022.
Make no mistake, he continued, “the rate at which they were increasing has fallen; house prices are not declining in real terms.
Therefore, a realistic seller would still be able to sell, but the current market was probably going to treat distressed sellers more harshly, according to Bhaduri.
The UK real estate market has undergone significant shift since last summer, said Chris Barry, director of the conveyancing business Thomas Legal.
“It went from low levels of housing stock with high demand, to a sharp drop in demand, and more recently, a gradual rise in stock,” he said.
Barry claimed that in the south, it now took an average of about two months from marketing to an offer being accepted.
“We believe this is due in part to the stock that was marketed during the quiet demand period still sitting on the market, as well as the fact that buyers are negotiating prices with sellers much more aggressively,” Barry added.
But according to Barry, high-quality new construction that was also very energy-efficient was selling quickly and, in some cases, he thought, would draw several purchasers, resulting in prices that were higher than the asking price.
Barry anticipated that the next three months will bring forth a greater sense of balance and stability in the real estate market.
Location, location, location
The terms “buyers’ market” and “sellers’ market,” according to Zaid Patel, director of independent real estate firm Highcastle Estates, are misused and misleading since they simply generalise the property industry.
According to Patel, a lot of factors affect whether a buyer or a seller has the upper hand, including location, property type, buyer demographics, building prices and quality, buy-to-let laws, the motivations behind sales, and many others.
According to him, more first-time buyers are currently available on the market after adjusting to the new interest rate environment.
Patel noted that some second-home purchasers have decided to wait to move since their current borrowing rates were more attractive.
First-time buyers are making offers that are closer to asking prices than anticipated, larger homes are selling at the asking price despite taking a little longer to sell than usual, and sellers continue to demand the price they believe their property would have sold for a year ago, plus or minus a few percent, he continued.
The buyers’ or sellers’ market may have historically been broadly relevant, but when real estate markets became more hyper-local and varied from one price point to another, this might be misleading, according to Nick Harris, co-founder of Quarters Residential Estate Agents.
Without a doubt, low borrowing rates and the ongoing stamp duty stimulus up until last autumn’s mini-budget significantly favoured sellers in the market, he said.
Harris claimed that since then, as mortgage rates have fallen into a new normal, the market has changed and one dynamic has balanced the other.
According to him, the housing market in the area was balanced, giving potential buyers a selection of properties to examine, and skillfully priced sellers frequently received multiple offers.
A perplexed market
There is currently a great deal of doubt regarding whose market it is, according to Mike Staton, director at mortgage and protection firm Staton Mortgages.
On the other hand, buyers believe it is 2008 and that house values have dropped by up to 30%. “Sellers still think we are in the pandemic and are being fed a load of bull about their home being worth more than £10,000 its true value,” Staton said.
Staton said that neither of them were accurate, which, in his opinion, revealed a total lack of knowledge of the property industry.
“This largely stems from unregulated and poorly qualified estate agents, but we have also seen a massive increase of new brokers join the mortgage industry over the past two years,” Staton said, adding that he thought a lot of them will leave the market now that they had been tested.