Will the housing market crash?

There have been many changes affecting the housing market over the last few months. Interest rates are now at their highest level for 14 years adversely affecting mortgages for thousands of people and stopping thousands more from realising their dream of property ownership.

To counteract the Bank of England raising interest rates the then Chancellor Kwasi Kwarteng introduced a cut to stamp duty for properties below £250,000 (£425,000 for first time buyers) in September, only for the new Chancellor Jeremy Hunt to announce this will only apply until March 2025 last week.

With all this uncertainty and the current cost of living crisis, you can be forgiven for putting your plans to move on hold. It’s not all doom and gloom - the housing market has not suddenly crashed all around us, but it’s certainly more price sensitive than it was.

Rightmove’s monthly report outlines that average house prices of those coming to the market in November has dropped by 1.1% which equates to around £4,159. This is not necessarily the start of a shift downwards as the portal saw similar reductions for the same month in the pre-pandemic years of 2015 - 2019. What they have seen is a willingness by sellers to reduce their asking price in order to secure a quicker sale.

In October their analysis showed that 8% of unsold listings reduced their property price, a similar figure to those that reduced in 2019 (7.5%). However, it is double the 4% of properties that lowered their price in 2021. This highlights the increased price sensitivity of
the market and the importance of listing your property at the correct price from the beginning.

Craig, our Kendal property valuer, highlighted this in our recent ‘Get it listed. but get it right’ blog. Generally, he commented, tighter financial reins bring more astute purchasers. Buyers will still pay good and fair prices for their new home but they are becoming wise to properties listed higher than the normal market would dictate.

First Time Buyers
Naturally first time buyers have been the hardest hit by the recent interest rate changes. We’ve all heard stories of couples losing their dream properties as lenders changed the goalposts on their mortgage offers.

As heartbreaking as this has been we are starting to see mortgage rates and availability settle down, with first time buyers starting to look again to gain a foothold on the property ladder. Rightmove notes that demand from this sector may be down by 26% but it’s still up by 7% on this time in 2019, figures that we’ve seen reflected across our branches.

Are we heading for a housing market crash? The ‘buying frenzy’ that we’ve seen during the past two years is certainly on the decline. The days of properties not reaching the market before they are snapped up at more than the asking price are few and far between. There has been a fall in house prices, but no more than we would expect at this time of year.

The property market has definitely returned to a more recognised status, emphasising the importance of pricing your property right the first time to ensure you achieve the best price.

If you’re looking for your first home or want to trade up or down our team of estate agents have years of experience in their local housing market and can guide you through the process. Get in touch for a free valuation or for advice about mortgages and how much you can borrow.

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