A look back at 2022
Well, what a year 2022 was. Three prime ministers, the sad passing of the Queen, a new King, a war in Ukraine and a cost of living crisis.
The housing market has also had a few twists and turns of its own with 2022 starting with a bang. Homes which offered versatile accommodation were still in high demand as many workers able to base from home, realised the benefits of flexible working from both the home and the office.
Mortgage rates were still very low and the number of buyers looking on line was over double the previous 12 months! As winter turned to spring and then summer, it started to become apparent that the housing market would begin to slow as the cost of living crisis became more to the fore, exacerbated by the war in Ukraine and the resultant rising costs in energy and grain.
Nobody could really have predicted the ill thought out mini budget in September which changed the pace of the housing market almost overnight with many lenders withdrawing mortgage products from the market. At Home Truths we like to analyse the market at a local level so our customers can have a better understanding of what is happening in their area.
Over 2022 sales agreed in our area were down against 2021 by 15% however Home Truths continued to buck the trend with an increase of 33% sales agreed compared to the previous year.
New instructions to the market
With covid restrictions now fully lifted more homeowners in the area chose to list their homes for sale.
Whilst there were many reasons for doing so, the key one was that people realised that they had more equity in their home than they thought and for a substantial number of people moving was more cost effective than extending or improving their current home.
Equally, many landlords decided to sell, some because they were becoming increasingly concerned about the publicised changes to the rental market and others to realise the equity in their properties. In our area new listings were down 1% year on year mainly driven by the slow down in Q4, however our listings were up 48% year on year increasing our market share by over 40%.
Property sales - review
Quarter four saw a much increased level of price reductions than in previous quarters. In some ways you could argue that a healthier market is created when buyers have more choice.
Key dates and headlines for 2022
The Bank of England voted to increase the base rate to 0.5% in an attempt to control inflation setting the trend for the rest of the year. War also broke out in Ukraine, having a major effect on the global economy.
The cost of living crisis starts to bite. Petrol and diesel prices are at an all time high and inflation is the highest in 30 years. We start to see fewer buyers looking for places in the countryside and more looking to be closer to where they work and the schools their children go to
Despite increasing mortgage, fuel, energy and food costs, property prices are still rising defying all expectations. There is also a huge shortage of properties in the rental market with the average property receiving dozens of requests to view.
In early September, in the span of just 48 hours, the United Kingdom lost its longest reigning monarch, saw a king, the first in 70 years, ascend in her place and watched a new prime minister take office. The latter would wreak havoc over the next 44 days and have a significant and damaging impact on both the housing market and the economy as a whole.
On a positive note, the now infamous mini budget saw the lower level of stamp duty change again, meaning that homeowners who only own the house they live in, do not have to pay stamp duty on purchases below £250,000. For first time buyers this is even higher at £425,000.
House prices across the country fell for the first time in over a year as the mini-budget sent shock waves through the housing market and pushed mortgage rates sharply higher. The Nationwide reported a fall of 0.9% in property prices compared to the previous month and the largest fall since July 2020. More buyers were seeking higher energy efficient homes with lower costs to run and we expect to see this trend continue.
Buyers started to make lower offers on homes and in some cases these were significantly below the asking price despite the Halifax announcing that prices have dropped by only 2.3%. Explaining what was happening in the market became even more important when speaking with clients and potential clients.
Various economists, banks, building societies and property market commentators make their price predictions for 2023. All predict that prices will fall with predictions varying from 4 to 8%. The Halifax being at the higher end. It is important to note that this has to be offset by a general increase over the last 2 years of in excess of 20% in some areas and therefore, if there were to be an 8% fall it would only take prices back to where they were in December 2021.
More favourable news is in the form of mortgage rates which, despite a base rate of 3.5%, started to fall back with some attractive fixed rate deals reappearing at around the 5% mark, giving renewed confidence to those looking to move in 2023.