Yet again, this month we see sensational headlines and some media reporting on the biggest slump in house prices for over 10 years! I remember reading similar ‘grabber’ headlines in the Autumn of last year, when interest rates started to rise and how they forecasted a great plummet in house prices and a collapse in the housing demand; this was in The Guardian newspaper. However, six months later The Guardian accepted that it was incorrect and demand was higher than expected and the number of sales have increased!
The latest headline grabber has originated from Zoopla, who believes in the next year we might see a million less contracted sales completing than we did in the average of last ten years; this is an interesting fact because when you look into the report, it clearly identifies some errors.
Firstly, the Halifax announced that their five year fixed rate was to drop and the fixed price deal would be 5.39% for a 5 year mortgage, rather than the current rates of 6.75%. Halifax therefore believes that interest rates will drop and this will stimulate greater housing demand.
The Zoopla report also mentions that the majority of the statistics coming from their estimate are based on UK house prices overall which have risen by 0.1% over the year and nowhere near their forecasted slump of 20%, which is yet to happen (if it does at all). It then goes on to say that buying a home in London or in the Home Counties is the least affordable area in the country, with properties priced at 9.3 times higher than the average earnings and mortgage repayments taking up 49% of people’s incomes. Here in the North East of England, properties are priced at 4.9 times the average earnings which accounts for a much lower percentage of peoples salary living in London
Statistics are often made to sound scary and alarming, but the actual reality is best taken from the facts that we receive; this year’s facts to date are as follows:
As at week 33 of this year’s national statistics, the cumulative net sales recorded are 551,000 and this represents 91.2% of the average net sales we had in the country since 2017, 2018 and 2019 combined (we have excluded the odd years of 2020 – 2022 which were Covid influenced).
Those net sales reflect the uncertainty there has been with the inflation of mortgages and interest rates, however, the pipeline (sales agreed not yet exchanged) that the estate agents record as of week 33 is represented by 427,000 properties, which is considerably higher than the average in 2017 – 2019 which varies around 388,000. This represents nearly a 10% greater number of sale in the pipeline, which, once they have completed by the end of the year, would give us a forecast of a greater number of sale than the average in 2017-2019
We see no dramatic slump, we see no huge change in the housing market, we simply see fewer numbers of buyers, which is a good thing as the market has been overheated and nobody likes best and final offers. As this market continues to cool, then the balance between supply and demand will become more equal and that will lead to prices stabilising which is what we all want.
I have never been impressed by sensational headlines and grabbers and prefer to rely more upon fact than fiction!