Right now the question on everyone’s lips is what does the next five months hold for the property market. The traditional dip in sales during the holiday season is almost upon us so expect sales volumes to fall over the next six weeks exacerbating the downward pressure on prices.
The normal bounce in September is likely to be very subdued as the burden of increased interest rates begins to bite. Those with an existing mortgage are more unlikely to move upmarket, landlords – at least those requiring a mortgage – are not expected to add much volume to their portfolios and many more will exit altogether, selling in the Autumn market.
With the current circumstances, a price freefall is very unlikely. But an increased supply of property and reducing buyer numbers will inevitably lead to anxious sellers slashing prices to attract a diminishing number of purchasers. In terms of property, it looks like there is a very bleak Winter ahead.”
In the rental markets further rises in borrowing rates look likely and the supply of rental property is likely to reduce as landlords sell and aren’t replaced with new entrants, challenging times lay ahead for tenants. Expect further rises in rents although at a slower rate than we have witnessed. We will soon reach a point where further steep rises simply aren’t sustainable.”
On house prices I think we are likely to see a further 5% eroded from sale prices this side of Christmas. Those who are employed within the property sector should be concerned not so much with price falls, but instead by the reducing sale numbers. This is starting to indicate a shift in the market where many homeowners are opting to wait and see what happens to the market and interest rates, and those that are trying to sell are not yet reducing their prices by enough to encourage the smaller number of buyers now looking.
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The second half of 2023 looks to be quite bleak for many estate agents who will be unable to build up the financial reserves needed to see them through what is likely to be an even more challenging Winter market.”
In the City of London, rising interest rates have had a delayed effect on the prime real estate in and around the City as well as on the purchasing power of its employees.
Many who were about to buy a home or invest in a buy to let saw this coming and did so a few months ago or at least agreed finance that now looks like a steal, even if just a year ago it would have brought tears to the eyes.
Right now we should regard the situation as a property market ‘phoney war’. All of the difficulties are elsewhere, affecting other people. The bars and clubs are still full. Trains deliver the recently graduated into town ready to start their careers and of course, they must be housed. That’s why multi-let property is booming.
On the horizon is the spectre of these rates and their effect on everybody, everywhere. The pain of high interest rates, inflation, and a huge tax burden is coming for the City. It cannot escape it. The summer of next year is going to look and feel very different. Developments will be mothballed, familiar shops gone and restaurants closing. And what’s more, that’s exactly how we’re supposed to feel – ‘if it’s not hurting, it’s not working’. Difficult times lay ahead for the City.
Jonathan Rolande is the founder of House Buy Fast and a spokesman for the National Association of Property Buyers.
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