Property market slowly stabilising

The property market is showing signs of stabilising, contrary to expectation of a prices crash. First time buyers are showing most activity, should landlords be revisiting plans to buy?

The UK housing market has been demonstrating signs of recovery. According to the latest data from Rightmove, average house prices have only slightly increased month on month into February by just £14.

During the holiday season in December, sales in the property market typically slow, but shoot back up in January. This year’s data compares more favourably with the ‘normality’ of 2019, with 11% more activity in the last couple of weeks. This is one of a few signals that are leading industry experts to think house prices are stabilising.

Other signs of house price recovery

Rightmove reported that the number of people contacting agents is up by 11% in the last two weeks, compared to the same period in 2019, and the number of sales agreed is now just 11% lower, compared to 2019, which has seen a steady path of recovery; sales were down by 15% at the start of the year.

Compared to September’s Mini-Budget announcement, when the number of sales had decreased by 30%, it has recovered immensely.

Thus, there are a number of indicators that the market is slowly recovering and people are more inclined to get in contact with agents to discuss potential sales/purchases.

A changing market

According to Tim Bannister, property analyst at Rightmove, the market is currently shifting towards a slower, more methodical market:

“The big question this month was whether we would see new sellers increasing their asking prices as has been the yearly norm as we approach the spring selling season. This month’s flat average asking price indicates that many sellers are breaking with tradition and showing unseasonal initial pricing restraint. In addition to market conditions demanding greater realism on price, we are transitioning into a slower paced market, where buyers will take longer to find the right property at the right price due to the higher cost of servicing a mortgage.

“There are other indicators that this will be a softer rather than a hard transition despite the turbulence at the end of 2022. Homeowners who are coming to market in the upcoming spring season should use their agent’s expertise and get the price right the first time, which can really help to find the right buyer more quickly.”

Property analyst further elaborated:

“The frantic market of recent years was unsustainable in the long term, and our key indicators now point to a market which is transitioning towards a more normal level of activity after the market turbulence at the end of last year. Agents are reporting that they are now increasingly seeing buyers who have more confidence and more choice albeit with revised budgets to accommodate higher mortgage rates.

“It’s a positive sign for the markets to see many in the first-time buyer sector getting on with their moves, though despite average mortgage rates having edged down, some first-time buyers will still be priced out of their originals plans and may need to look for a cheaper property, save a bigger deposit, or factor higher monthly mortgage repayments into their budgets.”

Agreement from across the industry

Property consultancy firm, Strutt & Parker, have also reported a positive outlook for the UK housing market, they share the view that the majority of the expected decline in house prices has already taken place.

Although the growth forecast for central London lettings has reduced, a decrease in affordability constraints and anticipated stock increases is expected to support moderate growth in the market.

Data from the firm also suggests that the UK housing market is likely to experience more stability and certainty, as a result of inflation coming under control. Some economists have even said this may result in a reduction in interest rates by the Federal Reserve and the Bank of England by the end of the year, or early next year.

However, their analysis highlights the possibility of a disconnect between the prime London sales market and mainstream and peripheral London markets, with the former being supported by a scarcity of stock, while the latter markets could be less robust.

Overall, Strutt & Parker report offers a cautiously optimistic outlook for the UK housing market in 2023.

Key takeaway for landlords

A lot of potential buyers were expecting a house price crash, however, with the current outlook, it does not seem like this may happen. Mortgage rates and house prices appear, in fact, to be stabilising.

Where landlords may have been holding off from purchasing in order to scoop a bargain, were a crash to occur, it may be time to finally pull the trigger on purchasing property.

This is especially true given the growing availability of mortgages at lower rates. Buy to let fixed rates are now headlining at 3-4.5%, and whilst associated criteria must be navigated relying on your broker gives you a great advantage in finding a competitive deal.

To speak to an advisor about your investment plans, request a call-back, talk to an advisor on our live chat facility, or call us on the freephone number at the top of this page