THE NEW NORMAL – How the property market has changed!
The last few months have seen quite dramatic changes in UK, a change of government, another change of government, dramatic news articles, is Boris back, changes to mortgages! If you’re a seller or a buyer, navigating this “new normal” can seem quite difficult, however “normal” is the key, the market has changed, but it has stabilised...
I am James Halford the Sales manager at Moreland Estate Agents, located in Golders Green/Hampstead Garden Suburb. I have attended meetings over the last month with Fine & Country and the Guild of property professionals, they are both market leaders and experts within the property industry.
Has the mini budget changed the property market??? – the simple answer is YES. However, was this always going to happen??? YES
Iain McKenzie the CEO at The Guild of property professionals explained during the roadshow at The Bloomsbury Hotel in London at the start of November, that the market place was always going to change. During the COVID outbreak, a huge injection of cash was placed into the economy, alongside low borrowing, this in turn fuelled a very busy housing market, a market we have not seen for years. This market was not sustainable forever, the mini budget has now created a market that will become the new normal. Interest rates will rise, and the market is expected to adjust accordingly. In actual fact the mini budget has forced this change and it could be of huge benefit to both seller and buyers.
The first lesson we need to learn about the “new normal” is mortgage rates, many purchasers or first-time buyers have never seen a market without low borrowing and low mortgage rates. So, the idea that the interest rates are going to jump up looks scary. Unfortunately, this is a fact we all need to come to terms with moving forward. I spoke with Capricorn Financial Services this morning and they are predicting that the rate will stabilise to an approximate average of 5%, whilst this is predictive, we all need to adjust to the new normal. However, as first-time buyers or new purchasers, the benefit of buying is still high. It is also predicted that rents might increase by 10% in 2023, making purchasing far more affordable in most circumstances. Historically agreed borrowing was at its lowest when the mortgage rate was at 0.1% however, agreed borrowing was at its highest when the rate was 7.88%. This means that mortgage interest rates have no exact correlation to the general market.
At Moreland Estate Agents, we are busy! There is still a hunger for clients to move, a hunger for lending and good levels of stock on the market. Price adjustments might be needed as we move into 2023, however, this will not result in a crash in the market place. We predict that prices might adjust by up to 5% and this will mean a property value will be at the same level of August 2021.
The government always puts a huge emphasis on the property market, firstly, during covid times, many incentives were put in place to ensure clients were still able to move and stamp duty holidays put in place to make the ability to move easier. In many locations, pubs, restaurants, non-essential shops, gyms etc were closed, but Estate Agents and conveyancers remained opened. The mini budget was a hot topic of conversation recently, when Jeremy Hunt was appointed as the new chancellor of the exchequer, he reversed many of the policies put in place, however the new stamp duty changes remain. The property market is very important to the government and the economy, they will always ensure that it remains open and as stable as possible.