Date Published 16 June 2023
Each year April is supposed to be the start of buying season for many property buyers. This is usually when demand picks up and there is much interest in offers exceeding amounts asked for to compete with other buyers. This year however, repayments on existing mortgages in April were £1.4 billion higher than new loans. Apart from in Covid lockdown this is the biggest drop since records began in 1993.
From March 2023 to April the number of prospective buyers registered per member branch came down from 97 to 70. The demand was also 30 per cent lower from April 2022 when the housing market was very busy. There was also a 70 per cent increase in properties available for sale compared to April 2022.
Although official statistics has not been released for May just yet, there has still been a fall in house prices. House prices fell 3.4 per cent year-on-year in May which is the biggest annual fall in nearly 14 years. This drop has been the biggest since July 2009, when an annual fall of 6.2 per cent was recorded.
There have been many reasons for this fall compared to other years. The availability of mortgages at low rates meant prices soared in the two years after the start of the pandemic, making it harder for new buyers to afford their first home. A slowdown in the economy and rising interest rates then happened to occur at the same time.
During the last 18 months the bank has raised their interest rates from 0.1 per cent to 4.5 per cent and is looking to raise them further given the failure of inflation to fall as quickly as expected. Other measures are also pretty downbeat, the seasonally adjust version of Rightmove's measure rose by 1.4 per cent but this is showing asking prices and not the final price which the seller accepts. Sellers are trying to raise their initial asking price in order to achieve a final price they are comfortable with.
Looking ahead, their may be a consistent downward trend in house prices. The 2nd half of the year has still yet to see more increase in bank interest rates which will mean sellers will not get their properties sold for the amount they wish.
Hope you have enjoyed this article and if you would like more information on this situation, please give us a call or send us an E-Mail. Additionally, if you are thinking about selling your property and when the right time would be for this, please get into contact with us.
