Has the hot weather cooled the property market?
Steve Cook – Partner Clarke Gammon
In last month’s newsletter, we talked about the increase in new properties coming to the market during the early summer market, this following months of low stock levels which fuelled the much reported buying frenzy as well as the inflation in property values.
The August property market is, in normal times, fairly quiet with many people taking advantage of the sunshine and school holidays to take a well earned break.
Although, as we have experienced for much of this year, 2022 is not a normal year in the property business. Certainly locally, August has seen an unseasonal increase in the number of new properties coming to the market from across our office network in the Guildford, Haslemere and Liphook areas of West Surrey and East Hampshire.
Summer holidays and the heat takes its toll
Following six consecutive monthly price increases the average price of property coming to the market has seen a 1.3% drop in August according to property portal Rightmove’s recent ‘House Price Index’.
Property prices do normally drop in August and this 1.3% drop is on a par with the average August drop over the past ten years, so there’s no need to sound the alarm bells just yet.
The cause of the drop is predictable with summer holidays taking priority for many and some owners pricing more competitively to secure a buyer quickly in order to beat the lengthy average time to completion and move home before Christmas.
The buyer demand issue we have seen for much of the previous 12 months is easing as more property stock comes to the market, although the considerable imbalance remains.
The ‘House Price Index’ notes that buyer enquiries are down 4% on the buoyant market of 2021, but remain 20% higher than in 2019 and whilst new listings are up by 12% on the same period last year, they are still 6% down on 2019 and available stock is down 39% on 2019.
How much have asking prices increased in 20 years?
August marks 20 years of Rightmove’s House Price Index, with national average asking prices more than doubling in those 20 years (+134%), from £155,994 to £365,173, outstripping both salaries and general inflation.
Mortgage interest rates
Mortgage interest rates have increased in line with the Bank of England’s base rate increases, most recently earlier this month from 1.25% to 1.75%, this, the largest of the 6 previous rate increases since December of 2021 at 0.5%, making the current rate the highest for 14 years.
Whilst mortgage interest rates are increasing, buyers can insulate themselves against future rate rises by taking advantage of the many fixed-rate mortgage deals that are currently on offer. Buyers can also lock in longer mortgage terms to bring more certainty to their outgoings, particularly when some lenders are offering virtually the same rate for either two-year and five-year fixed rate deals.
Downsizing
An interesting aside, over the past month or so we have seen an increasing number of sellers of retirement age that are considering downsizing. Some are the traditional downsizers looking to release some equity but also a good number that are not necessarily looking to trade down in value but looking for something a little smaller, more manageable and importantly more economical to run. This is of particular interest if you are or about to retire, given that future income is fixed and the increasing cost of living is likely to impact your lifestyle.
Considering a move this summer?
If you are thinking of selling, or need some help or advice on property related matters, please give me a call at our Liphook office and I’ll be happy to help.
Steve Cook
Partner Clarke Gammon
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