Are rising house prices impacting demand?
As house prices steadily rise, are you seeing a knock-on effect on demand? If so, how is this impacting the market? How do you encourage activity?
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The amount of enquiries for first time buyers and homemovers has definitely increased significantly. Investors are also returning to the market looking at more diverse investments and different lucrative projects. The property industry has such a knock on to other peripheral industries and markets so with the Bank of England starting to edge closer to reducing rates as well and the upcoming Budget on 6th March we can only hope for more good news to start igniting more sparks on the kindling of the fire.
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Demand last year dropped considerably when compared to the year prior. The UK market usually transacts around 1.2m purchases per year, the height was 1.4m and last year was just £1m.
The decline in demand doesn’t mean buyers have disappeared, it just means they are delaying their move until more certain economical conditions present themselves which it now has through reduced mortgage rates.
We are seeing a much higher demand in 2024 compared to 2023.
The decline in demand doesn’t mean buyers have disappeared, it just means they are delaying their move until more certain economical conditions present themselves which it now has through reduced mortgage rates.
We are seeing a much higher demand in 2024 compared to 2023.
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Working nationally, the level of enquiries we have recieved, is shifting again to a sellers market recently, which in turn is reflecting in minor house price increases. This is having an affect for first-time buyers and those with lower incomes, with affordability issues still paramount. The market as yet does not appear to be slowing up, however with inflation rates still high, and with lenders interest rates on the increase, could dampen demand short term, and i say to all potential borrowers looking to buy a property - dont hold off - local market dynamics are influenced by various factors beyond just house prices
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The solutions are obvious. Lower house prices and/or mortgage rates would increase activity. In any event, I'm not convinced house prices are rising. The Nationwide and Halifax house price indices exclude cash buyers and actually reflect average transaction values, not house prices. So for example, if there's a larger percentage than normal of more expensive properties being sold, this could distort their 'average house price' figure to show a rise when actually prices are falling. And that's quite likely to have happened over the last six months as the number of first-time buyer transactions, which are typically at lower prices, decreased markedly.
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From a mortgage broker perspective, the impact of rising house prices during falling interest rates and inflation is intriguing. Despite expectations, the current scenario has seen increased demand fueled by historically low mortgage rates and a robust housing market. Yet, rising prices may pose challenges for certain buyers, notably first-timers or those with tighter budgets. Nevertheless, as brokers, we're poised to navigate these fluctuations with expertise, empowering clients to make informed decisions aligned with their financial goals, even amidst changing market conditions.
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They are not rising enough for it to be coined as more than a correction or a steady rise. Everyone hopes their property will increase in value, the sooner you buy, the sooner you can benefit from being on that train. The issue arrises when you are on the up curve, but it curves too fast and then drops to correct itself again. If you bought a property on the top of the hill, you would end up facing negative equity for a while. Hopefully over the mortgage term, this would even itself back out again. Always pick a lender who can allow product transfers, dont get stuck and become a prisoner. GET GOOD ADVICE.
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To be honest we have been warning first-time buyers all year to get on the market during the low however many have confirmed a "I'll wait until the prices come crashing down" feeling - which of course is misguided. With such a strong demand for "decent" properties to come to market and with often a number of buyers chasing such properties, I fear that the boat has been missed by many first-time buyers hanging back before acting, blindly confirming they are saving more for the deposit even though the rate of property growth is now more than their rate of squirreling money away.
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A steadily rising house price is, for most people, probably the perfect scenario. It gives them confidence that they are not overpaying for something and that they are likely to see the value of what they are buying increase further over time, whilst not travelling upward so quickly that they are feeling rushed and pressured into making big decisions quickly or finding themselves in bidding wars with other parties.
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We haven’t seen house prices increasing locally in the south east yet, sellers are still in most cases having to accept offers under the asking price.
It’s busy with first time buyers and home movers, most borrowers have had enough of waiting to move and are prepared to accept the current market conditions.
As long as borrowers accept that property is a long term investment and not a way to get rich quick and the mortgage payments are lower than renting an equivalent property then it makes sense to buy now.
It’s busy with first time buyers and home movers, most borrowers have had enough of waiting to move and are prepared to accept the current market conditions.
As long as borrowers accept that property is a long term investment and not a way to get rich quick and the mortgage payments are lower than renting an equivalent property then it makes sense to buy now.
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For any first time buyers I will always remind them that when they buy a property most of the time they aren't buying to make a profit. They may want to sell and move on in the future but looking to make a profit from the property they are purchasing shouldn't be their first thought.
In the long-term buying your own property is nearly always going to be more cost effective than renting and it is important to remember although house prices may be rising so are rents and you will have far less control over rent increases than you will with your own mortgage.
I have personally felt the property market has been much stronger since the beginning of the year than it was at any point in 2023. People are now getting used to higher interest rates and the fact that their mortgage payments will be higher. It may not be something they like but it is something they are dealing with and higher rates are not putting people off in the same way as they were in the summer.
In the long-term buying your own property is nearly always going to be more cost effective than renting and it is important to remember although house prices may be rising so are rents and you will have far less control over rent increases than you will with your own mortgage.
I have personally felt the property market has been much stronger since the beginning of the year than it was at any point in 2023. People are now getting used to higher interest rates and the fact that their mortgage payments will be higher. It may not be something they like but it is something they are dealing with and higher rates are not putting people off in the same way as they were in the summer.