If you cast your mind back six months, the immediate prospects for the housing market were particularly gloomy.
In the aftermath of the disastrous Truss/Kwarteng mini-budget, commentators and even industry experts warned of tumbling house prices, rising interest rates and galloping inflation – three things guaranteed to negatively impact house sales.
And here at Living in London we experienced the fallout at the tail end of last year. The high interest rates and uncertainty exacerbated the seasonal slow-down in the run up to the holidays. This quiet period spilled over into early 2023 with January being as quiet as December.
However, with more positive news articles coming out that we're officially not in recession and global inflation rates, on the whole, seem to be on their way down, we've started to see activity levels in the sales market improve from February.
Trend to continue
This improvement in the market in February was dwarfed by the March market which has proven to be one of Living in London's busiest in recent memory!
Enquiry and viewing levels are dramatically improved and comparable with the post lockdown bounce in 2020!
We expect this trend to continue as the uncertainty surrounding the market wanes and demand for the area continues to rise. We expect that Q2 and Q3 2023 will be active markets with good buyer demand, especially from first time buyers who are keen to get their first step on the ladder and avoid ever increasing rental prices.
While it is true that inflation did continue to rise last month (the Consumer Price Index rose by 10.4% in the 12 months to February, up from 10.1% in January) and the Bank of England’s Monetary Policy Committee duly raised the base rate for the eleventh consecutive time (up by 0.25%, to 4.25%).
But despite this bombardment of economic factors, house sales remain relatively buoyant. Why?
The truth is that the underlying demand for homes far exceeds supply. People want to own their own homes and they want to progress up the property ladder. All they’ve been waiting for is a stable economy for them to feel reasonably safe in making what will inevitably be one of the most important investments of their lives.
This could only have been enhanced by the announcement in the Chancellor’s Spring Budget that inflation is forecast to fall to 2.9% by the end of 2023 – a clear signpost to more stable times ahead.
And this has been reflected by mortgage lenders who, after withdrawing thousands of products from the shelves last September, have re-entered the market and eased rates as a result. Borrowers with base rate trackers are having to pay more each month, but many fixed rate deals have been coming down steadily – largely because the base rate increases had already been factored in.
At the end of March, the mortgage approval data from the Bank of England showed that approvals in February stood at 43,536, up from 39,647 in January (+9.8%).
The latest figures show that this is the first monthly increase since August of last year.
CEO of Octane Capital, Jonathan Samuels, said: “We had previously seen well in excess of 60,000 mortgages approved on a monthly basis throughout the pandemic market boom period. However, this level of monthly buyer activity has been in sharp decline ever since a shambolic September mini budget that thrust the market into uncertainty.
“This increase, albeit a marginal one, suggests that the green shoots of buyer demand are once again starting to grow and we expect these green shoots to blossom over the coming months, as we enter what is traditionally the busiest time of year for the UK property market.”
Intent to transact
And founder and CEO of easyMoney, Jason Ferrando, commented: “Today’s uplift in mortgage approvals shows that the spring surge in market activity is underway and while the volume of mortgages being approved is unlikely to return to the highs of last year, an increase in buyer activity bodes very well for the wider health of the property market.”
Of course, this doesn’t mean that everything in the garden is rosy and another house-buying boom is just around the corner. But it does indicate that there has been a return to normality in the housing market following a long period of high inflation and last Autumn’s economic shock.
Latest figures from the Office of National Statistics showed that house price inflation eased in January for the third consecutive time.
Even so, average UK house prices were £290,000 in January 2023 – still up by £17,000 on January 2022.
CEO of Alliance Fund, Iain Crawford, said: “Having weathered the period of market uncertainty seen since the closing stages of last year, the nation’s homebuyers are now emerging from their winter boltholes with intent to transact. It may take some time before this returning buyer activity helps to stabilise house prices, but it would appear as though we have now seen the back of what many previously predicted to be a property market downturn.”
If you’re thinking of selling, buying, renting or letting a property and would like to find out more about how a 5 star rated, multi award winning agency can help, please do reach out and get in touch at firstname.lastname@example.org or call us on 0207 231 0002.