To say 2023 has been an unusual year for the housing market has been quite the understatement, with a confluence of factors that have affected other parts of the economy hitting the housing market after a surprisingly lengthy delay.
According to Rightmove’s House Price Index, the average house price has fallen by nearly 2 per cent, and whilst August typically sees a summer slowdown due to people enjoying their holidays, this fall is over double the average expected fall.
This, alongside government statistics that show that the number of house sales fell by 16 per cent compared to the same time last year, indicates a potential hesitancy amongst buyers affected by mortgage rate increases precipitated by Bank Rate increases.
This has had a few effects on both buyers and sellers and may suggest to estate agents a very small shift in the pendulum away from the seller’s market that we have seen over the past three years.
When the housing market first surged in 2020, sellers could effectively name their prices, and as a result, average house prices reached all-time houses on a monthly basis, but with cost-of-living pressures and increased interest on mortgages, sellers are aware they need to price more competitively.
Buyers are grappling with a somewhat uncertain short-term future, as it is unclear when house prices are going to fall, how steep the drop will be and when interest rates will peak, thus providing an opportunity to seek out cheaper mortgage rates and a greater chance at acceptance.
This means that buyers are deciding to wait and see how the market settles before making any serious investment, and motivated sellers need to price much more competitively than they used to even at the start of the year.
However, as has been the case for a while, pricing a home correctly the first time means it can sell in half the time on average compared to a home that requires a reduction after it has entered the market.