Land Registry HPI - November 2022
This morning the Land Registry published its house price index for November. Free PR platform, Newspage, asked brokers and property experts for their views.
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7 responses from the Newspage communityCopy all
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Prices may be nudging down but we are not witnessing the sharp slowdown many predicted. On the contrary, we have received more enquiries at the start of the year than last year and speaking to estate agents daily, they happily report a strong start to the year with higher viewings levels than they expected. Our enquiries are from downsizers, clients relocating for job moves and clients moving out of London due to working from home. Rumours of the property market collapsing 20% are so far unfounded.
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Though this data shows that prices are slowly edging down, properties are still selling and the market hasn't collapsed. We just sold a property 4.4% below the asking price, which isn't too bad at all in the current climate. There are fewer first-time buyers in the market, though. Vendors are more open to accepting offers slightly lower, as long as it's reasonable and feasible for them. There is still activity but estate agents and mortgage brokers need to play a big part to educate sellers and buyers on the housing market's current status to manage their expectations.
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This year has dried up for new mortgages. All we are seeing is remortgage work, which indicates that housing purchases have also stalled. This is not unsurprising as people are worried about their jobs and the economy in general. Inflation is hurting and rising interest rates make it less affordable to own a home. When the Bank of England pivots in a few months we might be some confidence return to the market.
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We have started better than expected, with a number of clients looking to calculate how much they can borrow. Plenty of mortgage rate talk as you would expect, but more conversations about affordability, how to reduce monthly payments and the term of the mortgage, etc. It's hard to say who may be put off, as they may not get to us in the first place, but from the conversations already this month, it does feel positive. With mortgage lenders continuing to offer mortgages up to 95% Loan to Value (LTV), I see the mood around property prices as less volatile. A small correction in prices yes, but not wholesale values necessarily. And with the cost of renting increasing too, the opportunity to buy can still work out cheaper each month, especially in the South East. Cautious optimism but a long way to go just yet.
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I've been saying all along that we should expect a reduction of 5% in house pricing and ignore the scaremongering about market collapses. We truly are seeing a return to normality. People that pushed themselves to the brink of affordability when rates were low are the ones who will be heavily impacted and I suspect we will see quite a few downsizing purchases this year. Also, there will be a market for the panic remortgages last year that fixed in at 6% as they believed the fear that was being spread. Many will realize the mistake they made in fixing long term on such high rates and want to come out of their deal. The big winners will be the ones that took out trackers with no ERCs, as fixed rates reduce further, we will see them return to fix their mortgage at a more appetising rate. But let's face it, the only winner will be the bank.
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The new year has started really busy for us. Prospective buyers are being more realistic, both in their expectations of what mortgage rate they'll need to pay and how much they are prepared to borrow. There's no great desire to borrow the maximum the lender will permit anymore. The jobs market is incredibly flexible as employment rights have been stripped back over the years. If it remains buoyant, house prices may have a soft landing. But the main driver will remain interest rates. On that basis, I believe house prices will still fall 15%-20% in 2023.
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The start of 2023 has certainly been more buoyant than first expected. The realisation for many that rates aren't going back down to 1% any time soon has set in has meant the people that held off looking to move at the end of 2022 and now deciding to just commit to the idea and take the cards they are dealt with mortgage rates. There is a sense of more confidence about the potential damage to the housing market has been limited with mortgage rates reducing. However, this does not change the fact there will still be a percentage of people who will be forced to sell their houses from spring onwards when these higher rates start to kick in and I don't think we will start to see the true extent of the house price reduction until towards the end of the year.