Property Market Update: September 2023

Welcome to the latest edition of the GetAgent Property Market Update! We’ve gathered insights from top experts across the UK to give you a well-rounded view of current market trends.

This September, we've observed a trend of falling national house prices across the various indices. Some sources have reported declines, while others have noted small signs of stabilisation.

Some regions are experiencing greater downward pressure than others. Both the Zoopla and Halifax indexes highlight the South of England as vulnerable to pricefalls, with London and its environs experiencing the most substantial.

Borrowing costs, particularly mortgage rates, continue to impact the property market. Higher interest rates are constraining affordability, influencing both buyer demand and seller pricing strategies.

Interestingly, some buyers appear unwilling to compromise on property preferences despite affordability challenges. They’re holding out for the homes they desire, refusing to consider smaller properties with fewer features.

Poor picture for house prices amid seasonal changes

There’s unanimous consensus that annual house price growth is following a downward trajectory. Rightmove anticipates a decline of -2% over the entire year, while Halifax and Zoopla report annual changes of -4.7% and -0.5%, respectively. Nationwide's figure of -5.3% remains unchanged from August.

Seasonal

This month, we observed some expected seasonal patterns. According to Halifax's index, while UK prices continued to fall in September, the rate of decline slowed noticeably in comparison to August (-1.8%).

The deceleration aligns with a typical seasonal pattern. It suggests that as the summer holidays conclude, individuals tend to refocus on their home-moving aspirations, leading to a moderation in price declines.

Regional

Halifax and Zoopla have singled out the South of England as the region facing the most significant downward pressure on house prices, with London experiencing the most substantial decrease over the past year (-4.8%).

The expensiveness of property in London leaves the city particularly susceptible to factors such as fluctuations in mortgage rates and affordability.

In Scotland, it’s a different story. House prices have risen by 1.6% in the last year. With house prices 40% below the national average there, most buyers can afford higher mortgage rates and access more expensive properties.

This sharp contrast underscores the diversity within the UK regional market. These disparities are further influenced by factors such as local economic conditions, and housing stock.

Bank of England holds base rate

In September, the Bank of England (BOE) brought an end to a streak of 14 consecutive base rate increases. During their most recent Monetary Policy Committee (MPC) meeting on the 21st of September, the BOE opted to maintain the rate at 5.25%.

The decision to hold the base rate came only a day after inflation fell from 6.8% to 6.7%, defying expectations that there would be another rise. The base rate freeze means that there is now a greater chance that mortgage rates have reached their peak - the BOE have warned however, that it will act further if inflationary pressures intensify once more.

Despite this small ray of positivity, mortgage interest rates continue to impact the property market. Higher rates are constraining affordability, influencing both buyer demand and pricing strategies.

Indeed, Nationwide's report highlights that a person earning an average income, and purchasing the typical first-time buyer home with a 20% deposit, would spend 38% of their take-home pay on their monthly mortgage payment. This is well above the long-run average of 29%.

The higher percentage of income required for mortgage payments underscores the impact of borrowing costs on affordability. It indicates that even with lower interest rates, the cost of housing relative to income remains a challenge for many buyers.

Buyers prioritise their ideal properties

Despite mortgage rates exceeding 5%, a large portion of buyers are not compromising on the type, size, or price range of homes they’re looking for. Buyers seem willing to wait for favourable conditions rather than settling for the wrong property.

Rightmove's index shows that price reductions among homesellers have hit their highest point since January 2011, reaching 6.2%. This suggests that some sellers might have initially set their property prices too high but later decided to make substantial price cuts to attract buyers. It indicates a level of confidence and autonomy among buyers, allowing them to go after properties with more reasonable price tags.

Summary: Pricing is key

In light of the latest reports, it appears that property prices may continue to decline. However, there’s a glimmer of optimism for homeowners looking to sell. The potential for lower interest rates in the near future will undoubtedly create more opportunities for both buyers and sellers.

If you’re contemplating the sale of your home, it’s imperative not to underestimate the importance of an accurate valuation. Choosing an experienced estate agent is essential.

Setting the right price strategy for your property is crucial in enticing offers, especially given the variations in market conditions across regions. Choosing a reputable expert with a proven track record of accurate valuations can significantly improve your chances of a successful sale.