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2022 Outlook for UK Property Market

The last few years have been far from predictable for the UK property market. With the impact of the COVID-19 pandemic, many experts were initially anticipating a property market crash but the property industry has thrived with property prices increasing steadily. The average house price increased by almost £34,000 since the start of the pandemic and now stands at a record £276,091 as of December 2021 (source: Halifax).

Initiatives such as the stamp duty tax holiday and the 5% deposit mortgage scheme have helped to keep the property market buoyant. However, the outlook for 2022 could be heavily affected by rising inflation and many experts are expecting a slowdown in house price increases. The end of the stamp duty holiday is predicted to have a significant impact on the numbers of sales in 2022 compared to 2021.

The Bank of England raised interest rates in December 2021 for the first time since the pandemic began, and further increases are likely to follow in the coming months; which will mean that the record low mortgage deals of 2021 will no longer be available and homeowners are therefore urged to remortgage sooner rather than later to fix on low rates.

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The ongoing impact of COVID-19 on the UK Property Market

Much like the COVID-19 pandemic, it is very difficult to predict what will happen in 2022. If new variants continue to appear then the property market will be affected by this. The uncertainty has resulted in some very mixed predictions from experts in the property industry.

Rightmove has forecast a 5% price increase in 2022, while Zoopla predicts 3% and Oxford Economics are warning of a 1.4% fall in prices.

Another consequence of COVID-19 is that it has influenced a change of trend in the desired property types and locations of where people are looking to buy property. After the first lockdown, there was a huge influx of searches for properties outside of cities, offering more space and local areas of beauty to enjoy.

There is still a high demand for these types of properties and there has also been a noticeable uplift in buying properties in the Northwest of England. The demand for homes is currently bigger than the number of available properties, so this may keep pushing property prices up in this part of the UK.

Seasonal changes to the Property Market

The seasonal pattern of the housing market is expected to continue as usual, with the typical lull in the lead up to Christmas and New Year followed by a surge of people looking to buy property in spring.

A survey conducted by Zoopla revealed that around a fifth of homeowners are eager to move house due to the pandemic, so it is unlikely that it will be a quiet year, but the general consensus is that it will not be as busy as 2021.

Outlook for First-time Buyers

First-time buyers have generally struggled in recent years due to rising house prices and the requirement to save up a large deposit. In 2022, the government’s 5% deposit scheme will help many first-time buyers to afford a property, but the increasing interest rates will price some people out of getting on the property market.

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division

2022 Outlook for Property Investors & Landlords

Many Buy to Let landlords have enjoyed the benefits of the huge price growth in the last 12 months, helping to raise the value of their portfolio or make quick profits by buying and selling a property a year later. In 2022, the predicted slowdown of price increases will mean that most Landlords & Property Investors and will not make as much equity in the property they buy over the next 12-month period.

In recent years, rents have been increasing and hit a 13-year high due to the high demand for rental properties and a low number of available properties. Until this imbalance is addressed, it is likely that high rents will continue.

For foreign & overseas Property Investors, the increase in tax may put some investors off, but the huge rental demand in the UK and relatively low interest rates for mortgages ensure that the UK is still one of the best places to invest when considering other options globally.

Another factor to consider for investors is the increasing requirement for UK holiday accommodation, with travel restrictions continuing and many people not wanting to risk booking a foreign holiday due to all the additional paperwork and costs this currently incurs.

People investing in holiday accommodation such as Lodges in the countryside or Apartments in coastal areas are able to charge large rents. Places like Cornwall, Wales, Scotland and the Lake District are in high demand with holidaymakers, so this type of investment should be highly profitable over the next few years.

Property Investors who can find properties in hotspots where prices are expected to continue rising or highly in demand holiday locations stand to do well, despite the predicted slowdown in price increases.

Get in Touch

If you are considering buying a new home, investing in a new UK property or even remortgaging your existing finance arrangements in 2022 to enable you to start saving money on your monthly mortgage costs, speak with us today for free and independent mortgage advice. Call us now on 03303 112 646. Alternatively, you can complete this short online form now to request a call back from one of our Team of highly experienced and CeMAP Qualified Mortgage Advisors who will gladly assist you with all your mortgage and commercial finance needs.

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There is still appetite for lending in the housing market, says top property lawyer

Without a doubt, 2022 was a turbulent year for the UK housing market. House prices may have hit record levels, but the Bank of England created havoc. By December, the base rate had been increased nine times over the previous 12 months, depressing market activity and putting the brakes on property prices.

According to optimists, there will not be a price crash but a soft landing thanks to a 25% fall in mortgage rates over the course of this year. They argue that forbearance measures from big lenders will help struggling borrowers as they switch to interest-only or competitive fixed-rate deals without the need for affordability tests. Since nearly two million people will need to re-mortgage as their fixed-rate deals expire in 2023, this will cushion the blow and reduce the volume of distressed/repossession sales.

Inflationary pressures and a fiscal squeeze have made mortgages unaffordable for many people relative to their incomes. Average UK house prices are now eight-times average earnings, according to Schroders. In London, the ratio rises to 11 times. Nevertheless, the economic mood is gradually moving away from ubiquitous gloom. For example, as the leading indicator of where corporate earnings are headed, UK equity markets have been back on an upward trajectory since November 2022.

A notable shift in sentiment can also be seen in reduced rates for two-year and five-year fixed mortgages: after spiking at 6.5% last October, they have now fallen back towards the 4.5% mark. For potential buyers, interest rates matter because they affect both affordability and lenders’ willingness to lend.

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Several commercial retail lenders such as Santander, Barclays, Nationwide, and Halifax have recently announced mortgage rate reductions to an average of around 4.5%.

When big commercial lenders cut rates, the market becomes more attractive and more affordable for domestic buyers, particularly first-time buyers – and not just to overseas or domestic cash buyers as happened when rates recently spiked. Notwithstanding the media hype about banks planning to reduce their mortgage lending, they still have plenty of appetite to lend.

The market has now fully digested everything that happened during the past year, including the “new normal” level of interest rates. These increases are now priced into people’s thinking, enabling industry professionals to advise with renewed confidence about where rates might be heading.

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division.

History shows that whenever the UK property market is reportedly down, it does not stay down for long. Good properties are not always available: in busier markets, people often lose out because of increased competition, so buyers with available funding should press ahead on properties they really want.

But there is a caveat: incomes will need to rise in real terms in order to increase domestic buyers’ purchasing power. Without that boost, the market may still be more attractive and affordable to overseas and cash buyers.

By Goli-Michelle Banan

Source: Today’s Conveyancer

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Shared ownership should be rebranded to attract the borrowers: Just Mortgages

The term ‘shared ownership’ is acting as a barrier to the borrowers it is designed to help, according to Just Mortgages.

The mortgage advice company says that feedback from across its broker network suggets clients regularly misunderstand who the scheme is targeted at and what the term really means.

Other misconceptions around shared ownership include what properties would be acceptable, what rates are available and how long the process may take.

Just Mortgages says shared ownership is often positioned as a vehicle for those first-time buyers without a deposit but it highlights that the scheme can be appropriate in those situations where relationships break down.

It suggests that this is an emerging group of borrowers that shared ownership could help but is often left off the agenda as the name suggests it might not be suitable for that borrower.

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Just Mortgages national operations director John Philips says “there is clearly an issue to be addressed with shared ownership”.

“Recent anecdotal feedback from some younger borrowers revealed that they actually thought shared ownership meant sharing the property and not living on their own.”

“Those who are slightly longer in the tooth may be tempted to scoff at this but our market is full of jargon and terminology that is completely unfamiliar with a new generation of borrowers and people with new borrowing requirements.”

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division.

“I’m worried that the terrific opportunity shared ownership provides to help people get on the property ladder is being diminished through clumsy terminology so maybe a rebrand is in order. Shared deposit scheme, low deposit scheme and deposit deferral scheme are just some examples of terms that would position the product in a more appropriate light.”

“I think any re-branding or re-positioning would benefit the whole industry and we would welcome the involvement of lender and broker trade bodies to support this.”

By Becky Bellamy

Source: Mortgage Strategy

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London’s Luxury Residential Market Booms Defying UK’s Home Sales Slowdown

Even though the UK is now seeing the steepest slump in property prices since the 2008 financial crisis, London’s luxury residences are managing to defy Britain’s housing market downturn, reported The Business Times.

Fifteen homes in Central London valued at £5 million or higher were registered as sold in the fourth quarter of 2022—which is 63% higher than the pre-pandemic average, according to researcher LonRes. “It’s not surprising, therefore, that it tempted would-be sellers to put their homes onto the market,” said Anthony Payne, managing director at LonRes.

UK Housing Market Poised for Disruption

The UK’s housing market is facing a ‘perfect’ storm as it tries to eke out growth while coping with the surging cost of living, hiking mortgage and inflation rates, and the risk of recession.

The result: rapid cooling in property demand and sales activities leading to a selloff in the UK’s housing market.

Let’s look at how much the British housing market and buyer demand have been impacted by current economic setbacks:

  • British home prices slid in December 2022 by the most in 13 years and are predicted to slip by a whopping 20% in 2023 if the UK’s base rate continues to hike, according to The Guardian.
  • The Bank of England has been raising the base since the beginning of 2022 as part of its effort to return inflation to its 2% target level. The bank rate has gone up to an annual rate of 4.0% in February 2023—a jump of 0.5% from 3.5% in December 2022.
  • On the other hand, surveyors registered a net balance of -47% for new buyer inquiries in January 2023, plunging from -40% in December 2022.

In such a circumstance, analysts have unanimously agreed that the UK’s property market is facing more turbulence this year.

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Wealthy Buyers Are Snapping Up London’s Luxury Property

Despite the present economic upset throughout Britain, luxury sales in London are skyrocketing, outshining the UK’s housing market.

But why?

First off, even though the interest rate and mortgage rate have hit an all-time high this year, millionaires and elites are less likely to get affected by the impacts of the increase, as they’re less dependent on borrowing.

Secondly, Britain’s pound continues to tumble sharply against the US dollar, dropping a full cent to around $1.20.

Part of the weakness of the pound sterling is the increase in power of the US dollar which is attracting more international investors and wealthy buyers to flock to London’s priciest homes.

Case in point: In the first half of 2022, overseas buyers purchased 48% of the total luxury home purchases in Prime London—a jump from 13% from 2021.

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division.

That said, the demand for luxury property management services offered by agencies like The London Management Company is getting a push, with ultra-high-net-worth buyers investing in upscale properties in Central London.

Offering bespoke services—from maintenance to upkeep and housekeeping—a class-leading agency ensures a client’s luxury property is well-managed, squeaky clean, and always ready for their arrival.

However, in the final quarter of last year, home sale activities decreased in Greater London due to climbing mortgage rates, soaring inflation, and high base rates.

“The final quarter of the year saw a change of direction,” stated the managing director at LonRes. “We’ll be keeping a close eye on how the market unfolds in the months ahead.”

Wrapping Up

Outperforming Britain’s housing market, London’s luxury houses are seeing substantial growth this year.

Source: Digital Journal

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Average asking prices for UK homes rose by just £14 in the past month

UK property prices have risen at their lowest-ever rate for February, according to data from the property website Rightmove.

Average asking prices for residential homes rose just £14 between January and February this year.

But the picture was mixed across the country, with prices rising and falling in different regions.

The average increase – effectively zero in percentage terms – is the smallest February rise ever recorded by Rightmove.

Months immediately after Christmas typically see big seasonal price increases, with more people buying and selling homes.

But average prices were still nearly 4% higher compared to a year earlier.

Rightmove said the negligible rise between January and February suggested sellers were realistically pricing their homes in order to sell them in a market that has slowed sharply in recent months.

House prices generally reflect the health of an economy.

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Rising prices help fuel economic growth, whereas falling prices can dent consumer confidence and dampen the economy.

This month mortgage lender Nationwide Building Society reported the longest run of monthly falls in selling prices since the 2008 global financial crisis.

Prices rose at different rates up and down the country, despite the average figure.

The North East, North West, West Midlands, East Midlands and East of England all saw decreases of -0.1%, -0.3%, -0.1%, -2.3% and -0.1% respectively.

Property prices in Scotland spiked by 7.5% over the month, followed by London (2.1%), Yorkshire and the Humber (1.9%), South West (1.6%) and South East (0.7%).

Growth in Wales was flat at 0%.

Tim Bannister, director of property science at Rightmove, said asking prices usually increase at this time of the year, which marks the beginning of the spring selling season.

‘This month’s flat average asking price indicates that many sellers are breaking with tradition and showing unseasonal initial pricing restraint,’ he said.

With asking prices remaining flat – rather than falling – Rightmove says this could be a positive sign that the housing market is not crashing as many analysts have predicted.

Economists polled by the Reuters news agency in November believed prices would drop by 5% in 2023, though even bigger falls have been predicted.

Still, there were some positive signs in the market.

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division.

Property demand was recovering after former prime minister Liz Truss’s botched ‘mini-budget’ in September 2022 which sent mortgage rates soaring.

Sales were up 11% in the first two weeks of February compared to the same period in 2019, Rightmove found.

After Truss’s mini-budget, which was widely criticised for recklessly cutting taxes, the number of sales in the housing market crashed by 30%.

The Resolution Foundation calculates the mini-budget cost the nation £30 billion.

Property sales remain down 11% on pre-pandemic levels.

By Josh Askew

Source: Metro

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‘Those predicting a property market crash are likely to be disappointed come the end of the year’

Research from eXp UK, the network of personal estate agents, reveals that reduced homebuyer activity has led to a -30.5% drop in UK house sales, and that one Scottish city is the only place to report an increase in transactions.

Following the house buying boom, kick-started by the Covid-19 pandemic, the UK’s market has started to cool as buyers act with caution in the face of recent widespread economic uncertainty.

Over the last 12 months, there have been 843,600 sales transactions completed across the UK. This marks a drop of -30.5% compared to the 12 months previous during which there were 1.2 million sales.

A regional analysis of the UK market shows that each and every corner of the land has seen a decline in sales, nowhere more so than the East of England where the annual figure has dropped by -37.3%, from 125,808 to 78,887.

In the South East, sales have dropped by -37.2%, closely followed by the South West with a -37.1% decline.

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The drop in transactions has also been significant in London (-35.3%), the East Midlands (-31.9%), West Midlands (-30.8%), Yorkshire & Humber (-29.7%), North West (-28.3%), North East (-23.6%), Northern Ireland (-22.5%), and Wales (-19.6%).

The smallest drop has been seen in Scotland where a decline from 121,544 transactions to 105,465 marks an annual drop of -13.2%.

After a hyper-local analysis, eXp discovered that Maldon, Essex, has reported the nation’s biggest annual drop in sales at -49.4%.

Uttlesford, also in Essex, reported a transaction decline of -48.3%, while Harborough, Leicestershire, recorded a -47.4% decline.

Meanwhile, the smallest decline in sales transactions have been seen in East Ayrshire (-8.8%), Blackpool (-4.8%), and Clackmannanshire (-4.2%).

However, there is one UK location that has bucked this wider trend to see an uplift in transactions.

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division.

The City of Aberdeen is the only place in the UK to report an increase in sales over the last 12 months, with numbers rising by 4.1%.

Head of eXp UK, Adam Day, commented: “The UK’s housing market has cooled slightly in the past year. Buyers have been cautious in the face of economic uncertainty, and this has understandably contributed to a decline in the number of homes sold.

“But it’s also important to note that there was an incredible surge in market activity during the peak of the pandemic and so while this decline in transactions may seem drastic, it’s really a return to normality.

“There remains a strong level of buyer activity across the market and house prices have not tumbled in the way many predicted they would. The current outlook for the market is also far brighter than it was just a few months ago and so those predicting a property market crash are likely to be disappointed come the end of the year.”

By Alice Cumming

Source: Business Leader

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2023 could be the year of recovery for the UK

It might be a little too early to talk of spring buds but the green shoots of recovery may not be too far away.

When winter began, talk in the mortgage market was concentrated on the impact Kwasi’s Kwarteng’s disastrous “mini”-Budget was having on the UK’s financial stability.

Fast forward two months and the outlook has improved significantly. Five-year swap rates may have risen slightly over the last day or so, but at the end of January they dropped below 3.5 per cent for the first time since September 2022 – falling as low as 3.285 per cent.

Meanwhile, two-year swaps have fallen to 3.944 per cent, down from 4.357 per cent in December 2022.

These figures are evidence of increasing market stability and offer hope that rates will not reach the highs predicted last autumn.

So what has changed in recent weeks? Firstly, inflationary pressures are beginning to ease slightly.

Wholesale gas prices have fallen to below levels seen before Russian’s invasion of Ukraine.

And this should eventually feed through to lower bills for households. Petrol and diesel prices have also dropped sharply from their summer high.

Meanwhile, the latest figures from British manufacturers, show that factory output prices unexpectedly fell 0.8 per cent in December, the biggest decrease since April 2020.

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Although inflation remains more than five times above the Bank of England’s 2 per cent target, it has fallen for two consecutive months and there are signs that it is heading towards single digits.

As well as an improved inflationary outlook, the pound’s recovery and the performance of the London Stock Exchange are also signs that investors have more faith in the UK economy and its recovery than some sections of the mainstream media.

Lenders will be keeping a close eye on all these key indicators to get a sense of what is to come.

Clearly we are not out of the woods yet; household finances are still under significant strain with real wages falling and the prospect of higher interest rates.

But the good news is that the expected peak in interest rates may not be as far away as was predicted in the autumn.

Forecasts now put the ceiling for base rate at 4 per cent to 4.5 per cent. This means we may only be one, or possibly two, rate rises away from a levelling off.

My sense is that the outcome is already baked into swap rates, meaning mortgage rates may also have reached their peak in the current cycle.

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division.

We are already seeing lenders start to reduce rates, with the best five-year deals for landlords back under 5 per cent, albeit with higher fees.

Renewed competition among lenders combined with improved swap rates and a less gloomy economic outlook should help to stabilise the market and could even push rates down further.

In turn this will help to improve affordability issues for landlords. Stress tests were tightened significantly as rates began to rise, which restricted buy-to-let borrowing, but they are now beginning to ease.

No one knows exactly what’s around the corner, but there is a sense that with spring on the horizon the most turbulent days are behind us.

Events of the past six months mean conditions are not going to return to ‘normal’, but the market and the UK economy is showing signs of resilience.

Let’s hope 2023 is a year of recovery.

By Phil Riches

Source: FT Adviser

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Mortgage Approvals Down but Sunnier Days Ahead for The Property Market in 2023

Recent uncertainty in the property market during the closing stages of 2022 has led to the number of mortgage approvals declining by -20% in the past year, while the number of remortgaging approvals has soared as existing homeowners stay put and look to stabilise their financial foundations by borrowing more.

The cost of living crisis and increasing price of borrowing has had a significant effect on the mortgage sector.

In 2021, there were a total of 944,704 house purchase mortgage approvals in the UK. In 2022, this dropped to 753,946 approvals, marking an annual decline of -20.2%.

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Financial concerns induced by the cost of living crisis clearly caused many potential buyers to postpone their plans in 2022, not least due to the fact that mortgage prices shot up seemingly overnight following the shambolic mini budget unveiled by the government in September of last year.

At the same time, the number of remortgaging approvals increased from 460,462 to 539,528 between 2021 and 2022, an annual rise of 17.2%.

This serves as further evidence of public concern brought on by recent economic uncertainties, with more homeowners trying to reduce their mortgage rates or release some equity to fund soaring costs elsewhere in their lives.

These market trends are further supported when analysing the overall monetary value of mortgage approvals.

In 2021, the total value of property purchase approvals was £208bn. In 2022, this dropped to £176bn, a decline of -15.3%.

At the same time, the overall value of remortgaging approvals increased from £92bn to £113bn, marking a 22.6% rise.

However, while the total value of homebuyer mortgages has fallen, the average value of each individual approval has actually increased by 6.2%, from £219,899 in 2021, to £233,510 in 2022.

This shows that while the number of buyers entering the market has fallen, the amount each is borrowing has grown, as they tried to contend with house price highs that were driven by the pandemic market boom and, as of yet, have shown little signs of reducing.

The average value of a remortgaging approval has also increased, rising by 4.6% between 2021 and 2022.

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division.

“Despite house prices continuing to climb in 2022, the immediate economic uncertainty that rattled the mortgage sector following September’s mini budget has had a notable impact when it comes to the number of mortgage approvals attributed to new house purchases in 2022.

At the same time, there has been a notable uplift in homeowners deciding to play it safe and stick with their current home, opting to remortgage in order to improve both their home and their financial stability.

However, mortgage rates are already on the decline so far this year, dropping by -14% in January alone.

On top of that, the wider economic outlook for 2023 is looking far brighter than many people feared towards the end of last year.

All in all, we expect spring and summer to bring sunnier days to the property market and a rejuvenated level of buyer activity to sweep the market.”

Source: Property Notify

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Rents show ‘no sign of slackening’ rising 8.3% in January: Hamptons

UK rents showed “no sign of slackening” in January, with average letting prices up 8.3% on a year ago, while 40% of tenants who moved home in London last year chose to leave the capital, data from Hamptons shows.

Rental growth in January was the sixth strongest month for annual rental growth since the estate agent began its Monthly Lettings Index in 2014.

The Midlands and North of England notched up the highest rises at 11.2% and 11.0%, respectively. Rents lifted in every region across the country.

In the capital, tenant costs eased slightly to 9.1% as inner London rents “completed their catchup to pandemic levels, slowing the headline rate of growth across the city as a whole”.

For the seventh month running, rents in one-bed homes grew faster than larger homes as the hangover from Covid-19 continues to unwind, the report says.

Both one- and two-bed homes posted faster annual growth in January than in any month since the index began nine years ago.

In November 2021, the average four-bed rent peaked at 126% more than the average one-bed, the study points out.

But this gap has since closed on the back of the average rent for one-bed rent rising 11.3% over the last year compared to 2.7% for four-beds.

This leaves the average four-bed home costing 108% more than the average one-bed in January, still slightly above the long-term average of around 100%.

The report also points out that around 90,370 households, or 40%, of renters who moved in London over the last year, chose to leave the capital, driven by the “rapid recovery in London rents post-Covid”. This figure is up from 28% a year ago.

The 90,370 tenants who left London last year compares to 62,210 homeowners who left the capital.

“This marks a return to form and a reversal of 2021 when more homeowners than renters left during a single year for the only time during the last decade,” the survey adds.

Areas that bordered London became home to renters moving out of the city last year, with Tandridge, Epping Forest and Sevenoaks topping the list.

Although, 38% of former London renters headed to the Midlands or the North of England, up from just 27% in 2019.

The report says: “Leavers increasingly keep their job in the capital while working remotely or commuting back occasionally. Instead, tenants are leaving to make their rent go further and renting larger homes in nicer neighbourhoods.”

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Hamptons head of research Aneisha Beveridge says: “While house price growth continues to slow, rents show few signs of deviating from their upward trajectory.

“The number of homes coming onto the market remains well below pre-Covid levels, with landlords facing tough decisions as to whether the arithmetic still works if and when mortgage rates expire.

“However, the downward drift in interest rates will bring some relief for those who need to remortgage in 2023.”

She adds: “The rapid recovery of London rents over the last year has left record numbers of tenants looking around for cheaper options.

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division.

“While the commuter belt is often prohibitively expensive for would-be first-time buyers, low yields mean renting remains relatively affordable compared to buying.

“The number of homes on the market here has increased faster than in the capital this year, tempting tenants to cross the M25.

“We expect the number of renters leaving the capital to continue rising for the foreseeable future. London leavers are generally in their mid to late 30s, seeking more space for a family or simply for a quieter life.

“But as younger generations are less likely to own their own home, leavers are increasingly likely to be renters rather than homeowners.”

By Roger Baird

Source: Mortgage Strategy

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Green shoots of recovery appear in the mortgage market

Confidence in the mortgage market is showing healthy signs of recovery following the disruption of the mini-budget in September 2022, judging by the latest mortgage market tracker report from the Intermediary Mortgage Lenders Association (IMLA).

The average number of Decisions in Principle (DIPs) that intermediaries processed in Q4 fell slightly by two when compared to Q3 2022, reaching the level seen two years ago in the final quarter of 2020. Despite a drop in November (to 23 per intermediary), December saw a rebound, rising back up to 26 and matching the levels seen in July and August of 2022.

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In Q4, the conversions of DIPs to completions also fell very slightly by 1% from Q3 2022, down to 37%. The business area and region seeing the biggest drop in conversions were in directly authorised DIPs and brokers operating out of the South of England, seeing falls of 11% and 6% respectively during Q4. Conversions for first-time buyers and buy-to-lets also remained steady with slight falls of 3% and 2%, reflecting a strong mortgage pipeline in the face of the macro-economic challenges now facing FTBs and some BTL landlords.

The dent in confidence caused by the mini-budget and resultant market volatility was evident in the data, with 29% of intermediaries reporting in Q4 2022 that they were ‘not very confident’ about the outlook for the mortgage industry, rising from just 4% during the same time period in the previous year. However, the most prominent dip in confidence for Q4 was during October, with November and December showing signs of stabilisation – returning to a 70% proportion of intermediaries who felt either ‘fairly confident’ (56%) or ‘very confident’ (14%) in December.

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division.

Comparatively, intermediary confidence in their own business declined only slightly. In Q4, 11% of intermediaries reported being ‘not very confident’ in the outlook for their business, rising from the 5% reporting the same in the previous quarter. However, overall, 87% of intermediaries still reported that they were either ‘very confident’ or ‘fairly confident’ in their own business outlook during the final quarter of 2022 – a dip of only 7% from Q3 despite the October disruption and rising interest rates.

Kate Davies, executive director of the IMLA, commented: “There are green shoots here, with December marking a noticeable increase in confidence compared to October. The Bank of England’s continuing action to bring inflation under control, combined with strong competition amongst lenders to attract new business, are good indicators of recovery.”

By Jerome Smail

Source: Property Industry Eye

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Housing market starts 2023 as game of two halves

For some, 2023’s housing market has had a rosier start than 2022. For others, it has been more hesitant. However you view it, 2023 is still, to a large extent, having to wait for the dust to fully settle following the chaos of Q4 2022.

Nicky Stevenson, MD of Fine & Country, shares her thoughts on what has been happening: “The Bank of England indicates that December mortgage approvals, at 35,600, were at their lowest level since the Global Financial Crisis, down by nearly a third quarter on quarter. However, Rightmove report the number of prospective buyers contacting agents at the start of the year was up 4% compared to the last ‘normal’ market in 2019. The start of January was also the third busiest day on record for property valuations, considered a sign of future demand.”

She adds that by the end of January, the swap rate had pared back to 3.8%, its level of early September. Although the base rate of interest has just risen to 4%, it looks likely to stay below 4.5%.

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Stevenson says: “These factors, together with the latest forecasts for the UK economy, mean that mortgage approvals are likely to settle somewhere above December’s level. There are signs too that inflation has peaked, and the latest independent forecasts for the UK economy released by HM Treasury paint a tentatively more optimistic picture, with the economy now expected to contract in 2023 by less than 1%.”

The rate of house price growth continues to moderate. Nationwide reported annual price growth in January fell to 1.1%, down from 2.8% in December, and all major indices indicate month-on-month marginal falls in prices.

Stevenson comments: “This contrasts with new seller asking prices which rose by 0.9% in January, the equivalent of £3,301, however, they are over £8,000 lower than their peak in October. With the market of 2023 set to be dominated, at least in the short term, by needs-based buyers as opposed to discretionary buyers, price sensitivity will be key to securing interest and offers, with the supply/demand pendulum likely to swing back in the favour of buyers.

“As many have commented, gains achieved in the market in recent times mean that for the majority of sellers a reduction in asking price is unlikely to translate into a financial loss when compared to the purchase price, rather sellers need to ensure their aspirations align to current market conditions.”

Focusing specifically on the prime sector, Stevenson says that year-on-year price growth in the premium markets is currently outpacing the wider market.

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She notes: “The 10.8% annual price growth continues to be fuelled by high-value activity in London and across the South. At £851,000 the prime market price threshold has risen by over £125,000 compared to January 2021.”

According to Stevenson, the recently released data from the 2021 Census indicates that there are close to 25 million households in England and Wales, of which 62% are in home ownership. This is down from 63% in 2011.

Stevenson concludes: “Such properties are either owned outright or owned with a mortgage or a loan. Mortgage status that has been recorded by the census since 1991 and Census 2021 marks the first time the data has shown that a greater proportion of homeowners are now mortgage free, at 53%, up from 47% in 2011.

“Wales and the South West boast the highest proportion of mortgage-free homeowners of all regions of England and Wales, while only in London is the proportion lower than 50%.”

Source: Property Reporter