It's that time of year when the leaves are turning to gold, the fire's lit and we're pulling on our woollens....

And once more, I write this update with a new, dramatic political and financial backdrop.

In this update, the last of 2022, we'll look at what's happened so far, the interesting market patterns that are emerging, and how buyers, sellers and house prices have reacted to the latest industry curve ball.

Plus, I'll tell you how all this is looking from where the rubber meets the road, AKA my seat as MD of Stowhill Estates Unique Homes.

2022 - The Story so Far

Back in January of this year, buyers nationally were bemoaning the lack of choice of homes to buy.  We felt it too - there was a definite feeling of a 'property drought'. 

In fact, at one stage, we had a mere six homes on the market, and a backlog of disappointed and frustrated buyers.

Fast forward to today, and we now have over 20 high-value homes for sale.  Buyer demand remains strong.  But with an increase in properties for sale, sellers are facing competition for the first time since the beginning of the pandemic.

Where once buyers were prepared to pay almost any price for the home of their dreams - the 'Pandemic Premium' - we're starting to see buyers becoming more cautious in their offers.

Whilst demand vs supply remains in balance at the housing market's top end, the average number of properties available to buy per agent nationally is currently sitting at 30% below the long-term average (source: PropertyMark), although this does seem to reflect a lack of supply at the lower end of the market.

What do our numbers say?

Whilst valuation requests and viewings have remained consistent throughout the year, the number of properties on the market has doubled.

This says two things:

1. The number of viewings per house has reduced from 21 in Q1 to 10 in Q3.
2. More of the homes we're being asked to value are coming to the market now.

Conclusion: the market is normalising after two years of turbulence, with supply and demand beginning to return to more typical long-term levels.  Prices remain high in comparison to pre-pandemic.

Stamp duty changes and the 'mini-budget'

In late September, rumours surfaced of a potential stamp duty reduction.  I presumed this would be encouraging news, although it was never going to be a game-changer, unlike that of summer 2021.  

Back then, the stamp duty holiday added fuel to the fire of an already crazy property market, leading to unprecedented demand and spiralling prices.

What would be the impact on the market this time?

Well, it never really got a chance.

To make things a little more 'interesting', then Prime Minister Liz Truss and her Chancellor Kwasi Kwarteng also announced some rather radical tax cuts, spooking the markets into some historic lows.

This ultimately cost them both their jobs.

New Chancellor Jeremy Hunt quickly moved to reverse the majority of the changes, in what was dubbed the 'un-budget' - perhaps the biggest economic U-turn in British political history.  However, the stamp duty reduction remains.

On 25th October, Rishi Sunak became Prime Minister.  This offered a period of stabilisation for the UK markets, with the impending bank review on the horizon.

On 3rd November, the Bank of England raised rates by 0.75 percentage points to 3% - the highest level for 14 years.

But the market response was interesting, to say the least...

During the period of mass uncertainty, with Truss and Kwarteng in charge of the UK's purse strings, mortgage companies were being extremely defensive with their rates - with most high-street lenders offering a minimum fixed rate of 6%.

But after the Bank of England increased the base rate to 3%, many of the high-street lenders reduced mortgage rates. 

For example, shortly after the announcement, HSBC reduced rates on a selection of its fixed-rate mortgages by up to 0.29%.

MPowered Mortgages, a smaller lender, reduced some of its fixed-rate deals by 0.76%.

Whilst delivering the news about the increased bank rate, The Bank of England Governor, Andrew Bailey, didn't shy away from using the 'R' word - recession.

It's likely this was used as a warning to Jeremy Hunt not to be too generous come the Autumn Statement - and to 'scare' people into not spending money, to help bring inflation down.

The big question now is: what's next?

What the experts are saying about the housing market:

"If life continues to get increasingly expensive, a stamp duty holiday wouldn't necessarily be enough to stop the housing market slowing significantly." - Sarah Coles, senior personal finance analyst, Hargreaves Lansdown

"The number of attractive mortgage deals tumbling this week is a bitter pill to swallow for those who want to move, and those with fixed terms due to end.  We're monitoring activity carefully in real time, and for now what we're seeing is that the housing market is still very much moving." - Tim Bannister, Rightmove

"Whatever action the government takes, it feels almost inevitable that UK prices will fall next year and possibly into 2024.  Prices have risen strongly over the course of the pandemic and for context, a 10 per cent decline would only take us back to last summer." - Tom Bill, Head of UK Residential Research, Knight Frank

"The slowdown to date has been modest and, combined with a shortage of stock on the market, this has meant that price growth has remained firm." - Robert Gardner, Nationwide's chief economist

 
What we're seeing on the ground...

A nice, calm, predictable market...

Actually, where's the fun in that?

Competition between sellers is definitely increasing, with homes that aren't priced correctly, skilfully marketed or presented beautifully, getting much less interest than those that are.

We're also seeing a lag in sellers' realisation that the market is not as hot as it was this time last year.

As a result, some sellers have expectations of a higher sale price than is realistic, and we're starting to see these homes sticking on the market for several months.  Buyers are rightly cautious of viewing properties they feel are overpriced and therefore we have started to see some price reductions at the higher end of the property market as sellers seek to remain competitive.

Whilst these adjustments are leading to spikes in buyer interest, and, if substantial, a successful sale, the skill lies in creating the right strategy in the first place to create sufficient competition between buyers to achieve the highest possible sale price.

What's hot right now?

In terms of price point, a clear pattern has been emerging over the past couple of months:  homes priced between £600k and £800k, and between £1.75m and £2.5m are the most popular, with viewing numbers remaining steady since the beginning of the year. 

Homes with a luxury, high-spec finish attract a great response, and still a high price.  And now more than ever, homes with beautiful views and extensive, characterful accommodation and grounds are still top of the list.

These homes are, by definition, rare and therefore command their own micro-market.  Careful positioning is crucial when it comes to pricing and marketing these homes, and that's where we come in.

Final conclusion

So, what does this all mean for you?

If you're still considering selling right now, but have been put off by media headlines and uncertainty, you could be surprised...

Uncertainty is never great for the property market, but its effect on the housing market is to keep stock levels low- and thus, higher competition amongst buyers.

My prediction: The market will get stronger over the last 6-8 weeks, with opportunities to achieve some strong prices before some downturn over Christmas.  January will also be strong, before settling down into a quiet February and a settled springtime.

There's a Chinese quote:  十年树木，为时不晚,

Or in English: "The best time to plant a tree was 20 years ago.  The second best time is today."

The best time to achieve the highest price for your home was summer 2021.  But if you're planning on selling in the next 18 months, the next best time may be now.

If you're unsure about your choices, and the best way for you to move forward, we can help.

Drop me an email to lucy@stowhillestates.com or call the team on 01235 751 888 and let's arrange a time to chat.  Either way you'll be making an informed decision!