November Newsletter

Despite the dramatic predictions of property price falls when the interest rates started going up, the market has proven to be resilient yet again, with property prices rising by 0.9 percent from September to October. We are certainly still in a buyer’s market with lower levels of activity and house prices down 3% compared to last year, however there were expectations of double digit falls this year. Moreover, according to some industry professional the outlook is starting to look positive.

A slight price increase

The recent 0.9 percent rise in property prices may have come as a surprise to some, especially as some economists had predicted a 0.4% fall in the same period. The growth is due to a significant lack of stock. While current buyers benefit from less competition, there is very little quality stock to choose from. This is one of the reasons why working with a buying advisor is key – they will be able to you access to properties that also aren’t on the open market as well as ensure you are ready to act quickly to secure the property when it is found. 

A positive outlook 

It’s also a good time to engage a buying advisor as there are expectation by housing experts that the market will soon start to grow significantly. Savills are predicting an 18.7% growth in prime property prices in London in the 5 years to 2028 and a 13.9% growth in the mainstream London market. The prime market is set to perform better as buyers are less reliant on mortgages. 

Mortgage rates 

One of the reasons why there is now a more positive outlook in the sales market is that the mortgage rates have started to come down slightly. For background, according to an article in The Times, “the rate on an average two-year fixed-rate mortgage has been catapulted upwards from 1.57 per cent in December 2021 to 6.26 per cent, while the average five-year fix has gone up from 1.59 per cent to 5.84 per cent”. The bank of England had announced very welcome news that they will hold its base rate of interest at 5.25%. This marks the second month in a row at this rate, after it had gone up month on month since December 2021 – meaning there should be stability going forward. While prime London property is not as reliant on mortgages, it still boosts confidence in the market. 

Rentals

The rental market is expected to continue to go through a significant growth phase. Prices have already increased by 9.5% and Savills are predicting that they will increase by 6% next year. As interest rates are significantly higher now than they have been in previous years, there are fewer landlords buying property. According to The Times, there were 77,000 new landlords who entered the market each year from 2017-2019. In 2023 -2025, there forecast is for only 55,000 per year. Now is an ideal time for a landlord with access to cash – they will be able to buy in a calmer sales market and take advantage of the record high rental market.