Dominic Parravani of Durrants examines the conflicting forces that are affecting the property market in the run up to Christmas.
The property market is changing. This can hardly come as a surprise to anyone, as so many other things in our lives are changing almost on a daily basis – the prime minister, government policies, mortgage interest rates, the cost of living, and public and commercial confidence.
How is all this change affecting the property market? Less than one might think. Most evidence seems to point to a swing from a strong sellers’ market to a moderate buyers’ market. Moderate because there are still powerful but sometimes opposing forces at work, such as low numbers of properties on the market, which are keeping house prices reasonably buoyant. This lack of inventory could well be the economy at work, but with Christmas on the horizon it could also have something to do with the time of year. So, we won’t have a more accurate picture of this until the new year.
Estate agents expect fewer deals to fall-through over the next few months. Active buyers want to keep hold of their current mortgage offers and see through purchases rather than risk re-applying at higher interest rates. But, over time, higher interest rates will become the norm and bring new pressures for most, including many thousands of homeowners coming off fixed-rate mortgages next year. But we should remember that interest rates are still below the thirty-year average.
The energy crisis might encourage some homeowners to lower costs by downsizing, thereby bringing larger properties onto the market. But many first-time buyers will have to wait longer until they have enough money to afford higher mortgage costs, so this could create a log-jam further up the property ladder.
All in all, it’s a bit of a mess. The property sector and housing generally need stability. We have had a different housing minister nearly every year since the start of this century and five in the past two years. So, for a start, our new premier could try and keep a housing minister in place for the next forty-eight months.
Yet, despite all this, buyers are buying and sellers are selling. Life continues, and the property market is undoubtedly functioning as it should in these circumstances. Why? Because this beautiful, funny, proud, eccentric, bickering, ever-tribal, gloriously diverse and wonderful kingdom is still a fabulous place in which to buy a property.