So far this year, we have seen continued growth in the property market, with an average 11% increase in house prices over the past year. We’ve enjoyed activity, confidence and recently, an increased volume of sales. It’s been a good year so far.
But there are now signs of an expected slowdown. Nothing dramatic, but it is interesting to note that the Nationwide reported house price growth of just 0.1% last month, and we have just heard that the Halifax has reported its first month of negative growth at minus 0.1%.
In some ways this has been inevitable following the surprising price hikes we have experienced recently. We rode out Brexit uncertainty and we rode out a global pandemic. But we now have the huge increases in the cost of living, prompted by fuel price hikes due to the Russian situation, and we find ourselves facing annual inflation at well over 10%. No wonder the Bank of England increased the base rate by half a base point to 1.75%. Don’t forget, that is still very low when compared to the average of 7.2% over the last 40 years.
Sadly, this will impact first time buyers the greatest – their payments could be up to 20% more than they were at the beginning of this year. They are also hit hardest by living cost inflation, and it looks likely that many of them will be forced to continue to rent rather than buy.
But do remember, over the past couple of years, sellers have been able to take advantage of the greatest imbalance of supply and demand that we have ever seen. That will now level off and I suspect we are entering a time of a more normalised property market. This means don’t try to get lucky with your asking price, look carefully at what is available around you – particularly at those competing properties that may be lingering on the market, what is that telling you, and make sure that yours competes favourably. You’ll then be in a strong position yourself to take advantage of what we expect will be a little bit more choice as we move towards the end of the year. One more thing – don’t let the news headlines freak you out - let the journalist them do their job of sensationalising the situation, and let us do ours of helping people move!
And if you’d like any advice on how best to position your property in this interesting market, then you know who to call, and we’d love to hear from you.