JACK JOWETT, DIRECTOR
As the Managing Director of Abshot Estates, I closely follow the latest trends and developments in the housing market. Rightmove’s recently released house price index presents a complex picture, reflecting the delicate balance between rising mortgage costs, buyer affordability constraints, and resilient buyer demand. In this blog post, I will delve into different aspects of the index and offer my insights on how these factors are shaping the current state of the property market.
- Property Price Decline: According to Rightmove, the average price of property coming to market has fallen by 0.2% this month, slightly below the norm for this time of year. This decline, amounting to £905, can be attributed to new sellers adjusting their price expectations in response to the rising mortgage costs. While this adjustment may dampen market sentiment, it is crucial for maintaining a healthy balance between affordability and sustainability.
- Impact of Recent Base Rate Rises: The index reveals that the number of sales agreed is currently 12% behind the levels witnessed in 2019, which was considered a more typical market. This decline can be attributed to the recent base rate rises enacted to combat higher-than-expected inflation. These measures appear to be impacting buyer activity, underscoring the need for caution and further assessment of the market’s trajectory.
- Resilient Buyer Demand: Despite the challenges posed by rising mortgage costs, buyer demand remains surprisingly resilient, standing 3% higher than in 2019. This is a positive indicator for sellers, as it suggests that motivated buyers are still actively seeking properties. The shortage of available properties for sale compared to historical norms has created a favorable environment for sellers with right-priced homes.
- Decrease in Available Properties: The house price index notes a 12% reduction in the number of available properties for sale compared to the same period in 2019. This scarcity of supply can create a competitive marketplace, benefiting sellers who are pricing their properties appropriately. It emphasizes the importance of strategic pricing from the outset, as properties that require a price reduction are significantly less likely to attract buyers.
- Impact of Mortgage Interest Rates: Rightmove’s mortgage tracker data reveals an increase in the average interest rate for a five-year fixed, 85% Loan-To-Value mortgage. At 5.69%, it represents a rise of 0.49% compared to the previous month. As a result, some prospective buyers are adopting a wait-and-see approach, pausing their moving plans until they have greater certainty regarding mortgage rate stability. This caution is understandable given the importance of securing a favorable mortgage deal.
Furthermore, amidst the complexities highlighted by Rightmove’s house price index, one encouraging trend emerges: the steady demand for realistically priced properties. If homes are priced right from the outset they continue to attract motivated buyers. This reinforces the importance of setting an appropriate asking price based on market conditions, rather than starting high and needing subsequent reductions.
Buyers today are well-informed and discerning, and they recognise the value of properties that are priced in line with market expectations. With a shortage of available properties for sale compared to historical norms, competitively priced homes have a higher chance of standing out and generating interest.
For sellers, this emphasises the need to work closely with experienced agents who possess in-depth knowledge of the local market. By leveraging their expertise, sellers can position their properties optimally and maximise their chances of attracting motivated buyers. Realistic pricing not only increases the likelihood of securing a sale but also minimizes the time a property spends on the market.
At Abshot Estates, we understand the importance of accurately assessing property values and setting realistic price expectations. Our team of professionals stays up to date with market trends, utilising comprehensive data and industry insights to provide our clients with accurate valuations and guidance on pricing strategies. By aligning the expectations of sellers with the demands of buyers, we strive to achieve successful and mutually beneficial transactions.
Jack Jowett | Managing Director