What is happening right now in the property market?

This year things are all a bit different in the property market. This is normally a busy period before things then quieten down a little through the summer months when people head off on their holidays, and it is often a time that house prices rise, however for the first time since 2017. If you are planning a house move in Tavistock, Okehampton and the surrounding areas, or even if you are staying put for the time being, we know that one of the biggest questions you may be asking at the moment is:

This year things are all a bit different in the property market. This is normally a busy period before things then quieten down a little through the summer months when people head off on their holidays, and it is often a time that house prices rise, however this year prices fell in the month of June for the first time since 2017. If you are planning a house move in Tavistock, Okehampton and the surrounding areas, or even if you are staying put for the time being, we know that one of the biggest questions you may be asking at the moment is: ‘what is happening right now in the property market?’

Rightmove House Price Index

June’s House Price Index from Rightmove has just been released, giving us an insight into what is happening throughout the housing market. When it comes to asking prices, this month has seen the first drop in asking prices this year; a fall of £82, and the first drop at this time of year since 2017. Although the property market saw a hopeful bounce in May this has turned into an earlier slowdown than normal for June. There is increasing uncertainty among movers in relation to the mortgage market, due to rising interest rates. In Tavistock, Okehampton and the surrounding areas, demand has dropped in 11 of the last 18 months which we directly attribute to these economic factors.

“Average new seller asking prices, the first and leading indicator of new trends in the market, have dropped slightly this month, signalling that the belated spring price bounce has quickly turned into an earlier than usual summer slowdown. We expect asking prices to edge down during the second half of the year, which is the normal seasonal pattern, and while we sometimes re-forecast our expectations for annual price changes at this time, current trends suggest that our original forecast of a 2% annual drop in asking prices at the end of 2023 is still valid. Agents report that new sellers are sitting in two camps – those who still have overoptimistic price expectations following the buoyant pandemic market, and those who have adapted to the new conditions and are coming to market with a competitive price. Sellers who price competitively are much more likely to find a suitable buyer quickly before their home appears stale, and they can often then negotiate on price on any onward purchase.”

Tim Bannister Rightmove’s Director of Property Science

Mortgages

Interest rates are an integral element in deciding mortgage rates. High inflation and favourable wage growth figures imply that interest rates are likely to climb higher than expected, leading to higher loan expenses. For those of you who are in the process of purchasing a home or are thinking about doing so, it's essential to understand how this interest rate hike can impact mortgage rates. Generally, an increase in interest rates can lead to higher mortgage rates, as lenders must increase their own rates to accommodate the higher borrowing costs. This means that homebuyers who were hoping to secure a low-interest rate mortgage may find themselves paying more each month due to the rate increase.

Prime Minister Rishi Sunak has refused to offer any aid for homeowners as the average fixed two-year mortgage rate reached 6% this year. From July to September, over 400,000 people are due to have their fixed deals come to an end, and could thus confront considerable rises in their regular payments. Cabinet minister Michael Gove announced that aid for those battling with their mortgages is being kept “under review”, despite Sir Charlie Bean’s warning that this would be “dangerous territory” for the government.

Tim Bannister states: “We expected some more twists and turns this year and we’ve had several in the last month, including stubbornly high inflation figures, surprisingly large average wage increases, and their eventual impact on mortgage interest rates and availability. We expect that there may be more change to come depending on this week’s inflation figures and the Bank of England Base Rate decision. It is likely to feel very frenetic for those taking out a mortgage right now, as they try to quickly lock in the best rate that they can find. Although the impact of higher mortgage rates on activity levels has been limited so far, with prospective buyers who can still afford to move appearing determined to go ahead, it remains to be seen how movers will respond to the expected further rate rises.”

How does it affect you?

It is always good to understand what is happening nationally, but if you wish to have insight into the local market, and how this affects you and your personal circumstances, contact our friendly team in Tavistock on 01822 617243 or Okehampton on 01837 54080