Fewer Houses Being Bought
With banks raising their mortgage rates month after month every time the Bank of England raises the Bank Rate, it comes to no surprise that fewer houses are being bought this year compared to previous years. OnTheMarket has said that its profits will rise and housing expectations will still be met despite less uptake. After finalising their outlook for the rest of the year, it looks promising. Business for the property site grew to £8 million by the end of January, which was up by 38% at the same time last year.
The property sector has been facing challenges since the pandemic and post-Brexit, and even more is to come with stubbornly high inflation. The average two year fixed rate mortgage is over 6.5%, and five year rates aren’t far behind this. Lower levels of new buyers are to be expected, as getting onto the property ladder has already been expensive. With an extra few hundred pounds needed for mortgage payments each month, it’s enough to put any new buyer off until the markets start to settle down.
As well as fewer first time buyers in the second half of 2023, OnTheMarket expects some active buyers simply waiting to see what the market does. New sales agreed are often way below asking prices, which not only affects the seller, but impacts estate agents too. Fewer buyers and cheaper offers all point to a downturn in the market, which is not good news in the wider sector, but the property website isn’t concerned about its future.
OnTheMarket isn’t worried as the company points out that people will always move for various reasons. The sale price is only one of the factors involved in such a big decision. Even if people are being more cautious, people will always want to or need to move, such as relocating for work purposes. According to a survey in May, London markets have found to be particularly resilient. Of everyone surveyed, ⅔ of sellers and ¾ of buyers were expecting to complete in the next three months. Despite the signs of a downturn, such high percentages are reassuring.
The website boasted about its useful valuation tools, which it argues are now more important than ever. The instant online valuation calculator helps give a little insight into what a property might be worth. They have seen a massive uptake in property valuations and are expecting to still be profitable this year. Despite signs that point to a downturn, some areas are fairly resilient and will weather the cost as it comes. Other areas may not be so lucky.
HMRC data points to a 27% decrease in house sales in May compared to last year, with 3% fewer than April. Nationwide reported that house prices were down by 3.5% on a yearly basis, but actually increased by 0.1% in June. While some experts are quick to point out that property prices are falling, others identify that the number of transactions is a better indicator of overall market health. As long as sales are ticking over, the sector will keep on moving.
Where buyers and sellers may be taking their time to complete, the sales are still going through. Although household budgets have been massively squeezed thanks to the energy crisis, cost of living crisis and stubbornly high inflation, some are still able to see property sales to the end. The vast majority is unsure about how their finances could cope, especially with warning signs that interest rates could be raised again. Concerns about affordability will always be an issue, whether the country has high inflation or not.