November brought stability to the property market, with nothing outrageous to report. In fact, positive news began filtering through, starting with mortgage rates. Financial advisers saw rates peak in October and, in some cases, begin to fall in November.
The interest rate outlook is also heartening, with economists forecasting that we have almost reached the peak. Even the Bank of England revised its pessimistic inflation predictions. While currently at a high of 11.1%, it is expected to fall closer to 2% in two years and potentially reach near zero in three years.
Seasonal lull v. our new normal
It’s clear there is a degree of rebalancing ahead. While no one expects mortgage rates to return to rock-bottom lows or house price rises to be so rampant, there is a ‘wait and see’ approach being adopted by some movers. Subdued demand, however, is very hard to separate from the seasonal lull in activity we always see in the run up to Christmas.
On pause but pent up
Rightmove’s latest report suggests overall property demand was down by 15% in October 2022, when compared to the same month in 2021. This sentiment was reflected by Propertymark’s latest report. Its members found new buyers registering per branch fell to 64 in October. Although this was down from 83 in September, this October’s figure almost mirrors the same number of potential buyers seen in October 2021 (67).
One group that is looking to temporarily pause its plans while the market adjusts is first-time buyers. In this group, buyer demand is down 21%. The finding of Aldermore Bank expands on this theme. Its research found the cost of living crisis had delayed a third of first-time buyers from buying a property, with average delays of 20 months.
It’s important to note that first-timer buyers aren’t pausing because they can’t save for a deposit. On the contrary, the same Rightmove survey found 42% of first-time buyers looking to purchase in the coming years already had their total deposit saved. A further 43% were in the process of saving.
With forecasts for lower inflation, mortgage rates and house prices in 2023, pent-up demand has the potential to be released. And when first-time buyers have enough confidence to purchase, they will be looking for energy efficient homes as the buying habits of younger homeowners have been exposed by Go.Compare.
It found 60% of Millennial buyers (currently aged between 26 and 41) would be put off by a property with a poor energy rating. Additionally, Millennials are the most concerned about energy efficiency when compared to other generations.
Eco features find favour
When it came to specific eco features, 45% of Millennials who knew what a heat pump was would be more likely to buy a house with one. In respect to solar panels, 68% in this age group thought they were of benefit – more than any other generation.
The rental market continues to be buoyant, with some startling figures from Rightmove. It says there is quadruple the number of tenants versus rental properties available. As a result, letting agents are fending 36 enquiries for every one of its available rental properties.
Uptick in smaller homes for sale
In high demand are smaller rental properties, comprising studios, one and two-bedroom properties. The availability of this type of accommodation is down 4% when compared to 2021. Interestingly, the supply of studios, one and two-bedroom properties in the sales market is up 13%.
As a result of the above statistics, first-time buyers with a deposit saved may find more choice in the sales market this winter. They may also be able to find better value too, with a Zoopla report confirming offers 3% below the asking price are now accepted by the average vendor looking to confirm a sale.
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