Nationwide January 23 HPI

Making predictions about the housing market at the moment is a mug's game. The mainstream media are constantly pushing the doom and gloom narrative but some sellers we're working with now are getting above asking price offers, as there's still competition for limited stock. For anyone selling right now, it's all about going in at the right price to start with, as if you don't, you won't generate any interest. There's still plenty of activity out there despite the Bank of England's hawkish stance. There's life in the property market yet.

We have been really busy in January, with a mixed bag of remortgages and purchases. There are plenty of people still looking to get onto the ladder in 2023, which is great to see. As we are still seeing rate reductions from lenders, I believe they have already priced in the looming base rate increase, so although we will see movement across trackers this week and next, fixed rates are still reducing. I think this will offer comfort to those looking to buy, but, the issue is whether this is communicated effectively, as most of the general public see the base rate increasing and presume all rates will increase with it, which we know from the past few months is not correct. So I think those looking to move shouldn't be put off this year, they will just be in a calmer market than what we saw last Summer, which isn't a bad thing.

The property market, as it often does, has defied expectations in January. We've seen a large number of enquiries from home buyers and remortgagers alike, suggesting that the turmoil felt at the end of 2022 is dying down and confidence is returning to the market. If, as expected, the Bank of England raises rates again this week, I don't expect this to have a massive effect on the property market. Mortgage rates have been coming down consistently over the past couple of months and lenders are entering 'rate war' territory. This will only encourage buyers further. House prices have dropped, on average, around 5% in the past few months. I think we can expect the same to happen over the next three to four months and that things will then level off. I don't think the huge price drops that some are predicting are going to materialise.

I'll admit I've been a little surprised at the number of calls I've had from people who have just agreed on new purchases, both owner occupiers and landlords. I expected January to be a lot quieter due to all the negative talk around rate rises and house prices, so I'm happy to see that people aren't believing everything they read and are being pragmatic about buying when they are ready and not waiting for a "perfect time to buy", which rarely ever comes.

All the fixed rate reductions are bringing back previous buyers to the market. We have had several buyers who held off from doing anything in the last three months of 2022 following the mini-Budget and are now feeling confident enough to start looking again. Appointment levels have certainly increased and expect that to translate into an increased level of mortgages agreed over the next few weeks. The Bank of England base rate rise this week should not affect the market. If anything, if we get a base rate rise and lenders continue to drop rates then it is only going to boost confidence in the market further. How the base rate rises are portrayed by the media is usually the biggest worry. Even if Bank Rate is hiked to 4.5%, I expect we will see mortgage rates comfortably between 4-4.5% for the rest of the year.

We're seeing plenty of buyer interest from business owners and the self-employed generally. It's encouraging because with house prices falling, there's plenty of incentive to wait and see if they drop further. Which I've no doubt they will. With high mortgage rates and the effects of inflation slashing living standards, I think a 15% fall in house prices this year is very likely. 20% is not out of the question.