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The UK housing market has been getting a lot of coverage in the news over the last few months. Whether it is changes to the rental market proposed in the new Renters (Reform) Bill; worries about whether the next generation will ever get a foot on the property ladder or the extra pressure interest rates will have on mortgage payments, there is a lot to digest.
Understandably all of this press coverage has left many people worried about the future of the housing market, especially if they are trying to buy or sell a property at some point this year. To help ease some of those worries, we asked Foden Property Sales Manager Jenny Waite for her thoughts on what we are seeing in the housing market at the moment and where she thinks it is heading over the next few months.
Are we going to see a housing crash?
The short answer: no, I don’t believe we will. Yes, there have been changes to the market recently, but in our opinion, they are changes which needed to happen. Over the last couple of years, the combination of Covid and the stamp duty holiday has created quite a volatile market which was never going to last as it was too unsustainable.
House prices reached such a high level at one point that we were worried they were never going to slow down and level out. Thankfully, it would appear that the housing market has finally started to calm down and pause for breath as prices are indeed starting to come down. This doesn’t mean that the housing market is about to crash, but we do think that everyone needs to be a bit more realistic about the value of their home and what they can expect to sell it for.
It is also important to point out that whilst there has been an adjustment of values over the last four to six months, house prices are still much higher than they were pre-Covid so we should still view things positively. Even though you might feel disappointed that your house has dropped a couple of percent from last year, you should remember that the majority of sellers are buying in the same market, so what you feel you might be losing on your sale you will probably gain back on your purchase.
Are Estate Agents still valuing properties too highly?
Recent statistics have revealed that, of the properties currently on the market in the UK, up to 30% could be overvalued. This is something which I am seeing on a daily basis when I go to people’s houses to conduct valuations. Quite often I am often the second or third estate agent to visit their home for a valuation and unfortunately, on occasion, I am coming up against other agents who have given them what I would consider to be an unrealistic valuation.
As much as we are all competing with each other in order to get the listing and to get you as much money for your home as possible, I also have a duty of care to give you a valuation based on evidence. When I am sitting in your living room, I could just tell you what I think you want to hear, or I can tell you the truth, based on evidence and supported by the market, of how much I believe your home is actually worth. Here at Foden Property, we have always been really proud of the fact that we are known for being very realistic with our prices. Surveyors come to us for comparable prices because we’re realistic, we know about the market and make sure we regularly keep up to date with what’s going on in the market. We do the research and will have put in the work before we visit your property and sit in your lounge. We will never just pick a price off of the top of our head based on what we think you want to hear in order to gain your business. Unfortunately, we do know that some agents will occasionally come into people’s homes and ask them how much they want for their property rather than giving them a realistic valuation of what we know their home is actually worth. Yes, it is my job to get you as much money as possible, but that doesn’t mean I’m going to mislead you just to sign you up and then have to keep reducing the price of your property in order to secure a sale.
Do you think property prices are still too high?
Yes, I think in certain cases they are. People’s perceptions are definitely starting to move now. They are watching the news, listening to things and they are becoming a little bit more realistic. But there definitely still needs to be movement on prices. Although we all know that just because you’ve watched the news, you still hope it doesn’t apply to you when it comes to buying or selling your property!
What we’re seeing at the moment is more offers than we’ve seen in recent years. The last couple of years we were selling at asking price, or even over asking price in many many cases, and we’re just not seeing that anymore. Now, we are seeing offers coming in which are well below the asking price, which often leads to a lot of back and forth between buyers and sellers. In fairness, we are still managing to negotiate them to an agreeable level to make our client’s onward purchase work for them. We’re still confident in the market and that people can still sell their homes for a reasonable price.
First time buyers - are they still around?
Absolutely! It’s a great time to be a first time buyer because what you haven’t got currently is the race to the finish line which you will have had for the last couple of years. Previously we’ve had situations where for every one property we were selling, there were 10 buyers desperate to buy it. Higher prices were excluding first time buyers from the market because the market was moving so quickly. However, the slow down in the property market and the introduction of 100% mortgages means that now is a great time to be a first time buyer. It is also fantastic to see that lenders are finally starting to take into account that if someone has been paying their rent on time for several years, then they are likely to be able to pay a comparable mortgage on time too.
Are people still investing their money in property?
Yes they are, but again this sector of the market has definitely slowed down over the last few months. The increase in mortgage rates will have a massive impact on how many people will be able to afford to buy investment properties. This in turn will have a massive impact on landlords as if there are fewer properties purchased for their rental income then that obviously in turn means there will be fewer properties to rent.However, if you do have money to invest in property - either with or without a mortgage - then now is definitely a good time to do so. In our opinion, your money is always better off in property than just sitting in the bank.
Final thoughts
In short, has there been a change in price, yes. Has there been a change in pace, absolutely. Are we still confident in the market, yes 100%. My advice is be realistic, be patient, wait that little bit longer and you will definitely sell and move onto your next new home.
For more in depth discussion on the UK housing market in 2023, listen to our latest podcast episode with Jenny Waite and Foden Property Director, Katie Hatten.