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Posted on January 25, 2024 by Tom Grant
Categorised in: Uncategorised
Last year was a challenging housing market for all participants, to put it mildly. We saw the tide turn from rampant post Covid enthusiasm to an economic bear market, chastened by high inflation and rising interest rates. Whilst the winds of change were fanned by Liz Truss in autumn 2022, it was inevitable that the buoyant and rising market could not be sustained indefinitely.
The principal cause of the market cooling last year was economic pressure, this in turn sapped buyer confidence, which in our experience contributes 5% to property value. Rapidly increasing living costs reduced affordability and unnerved a good proportion of all but the most robust buyers, the net result being less buyers and significantly, less fluidity in the market = cooling house prices.
There is a real psychological battle between what has actually happened and people’s perception of the market. To put house prices in context, last week the government reported the latest house price index (ONS) – according to them, the average house price fell by 2.90% in the year to November 2023. Our gut feeling is that this number might be a bit light and the real market adjustment has been higher. However, this is still a relatively minor reduction given the herculean rises seen in 2020/2021, in excess of 20%, and we do need to be a little pragmatic about house price movement – a normal variability budget of 5% value is a sensible measure to keep in mind.
Given the huge variability in estate agent values, the biggest problem we face is market deception – too many agents are over egging the pudding just to win the instruction, with no honest hope of achieving anywhere near what they are quoting. The best advice we can give is to get several well qualified opinions and take a reality check – is your house really worth £100,000 more than the other agents are telling you? If you want an objective view on value, we are always happy to help – call Tom or Richard if you want to review your plans.