Despite headwinds first quarter of this year has been as busy as ever
Despite mounting financial pressures and rising cost of living and interest rates, for the most part the first quarter of this year has been as busy as ever. However, will this continue for the remainder of the year? We asked a few Members of The Guild of Property Professionals about what they are seeing in their local markets.
According to Philip Jackson, Director at Maguire Jackson in Birmingham, while the second quarter of the year has slowed markedly from the first, he anticipates the market to pick up again and gain momentum during the second half of the year. “During Q1 the expected interest rate hikes encouraged sales with purchasers looking to lock down lower interest rates. During this quarter we are starting to see an imbalance between applicants offers and vendor expectation. We are anticipating that this will correct itself as the year progresses, with vendors becoming more realistic acknowledging cost of living concerns,” says Jackson. “Looking at the remainder of the year, prices will stabilise. We are anticipating the market for City Centre living will still be attractive to potential buyers and well-presented properties will still sell well and achieve good prices.”
Tim West, Principal at Sworders Independent Estate Agents in Sudbury, says his office is still very busy but believes the market is peaking out. “We have been selling pretty much everything that comes to the market straight away for over 18 months but now buyers are worried and so are offering a little below guide prices and walking away if they don't see some flexibility from the seller,” he says. “New instructions are coming in but at a slowing rate. However, those new entrants to the market keep hearing how prices have been rising and so are aiming for very high guide prices. After a few weeks, they are then reducing their expectations. Every day on the portals, we see price reductions now, not something we have seen since the Stamp Duty Holiday energized the market.”
Andrew Simmonds from Parker’s Estate Agents and Property Lettings in North Somerset, says that people are certainly starting to talk more about the cost-of-living pressures and how they are going to cope with it, but there are few signs at the moment that it is having an impact on the local housing market.
He continues, “With around 80% of people having mortgages on a fixed interest rate those changes have yet to have any real impact. Although we are seeing more people put their property on the market it still feels as if we are seeing a re-adjustment from the last few years where Covid restrictions dampened activity, rather than a rush to sell for financial reasons. There is no doubt that as we go through the year, we are likely to see the cost-of-living crisis have a dampening effect on buyer demand, but for now we still have a healthy number of buyers and sellers locally. After a very strong first quarter that reflected freedom from the Covid restrictions we expect the second quarter to hold up well.”
Head of Sales at Whites in Salisbury, Tony Williams, says that so far this year it has all been about lack of stock. “There are probably twice as many buyers as expected for half as many sellers, and therefore most listings have gone to best and final offers with multiple bids, fuelled by out of area buyers who pay whatever they need to. As a result, prices have already risen by circa 7% this year. Currently there is no sign that this will change in the immediate future. However, most people we speak to think there will be a decrease in activity and a levelling off of prices. We think that in three months when summer arrives, increasing prices have started to bite, then we think the market will slow down but not enough to see any backwards movement and we suspect prices will continue to rise but at a lesser rate,” he adds.
Tim Grainger, from DOMVS estate agents in Dorset, says: “Q1 started very promptly. Almost as soon as our doors opened, the phones were ringing and didn’t stop throughout the first quarter of the year. Pent-up demand and a growing migration to Dorset contributed to the widest ‘supply and demand’ gap witnessed in my career.
“The number of active buyers on our books peaked in April, and as we continue through the second quarter of the year, I can now feel the pace starting to change, with May 2022 showing a decline in new buyer-registrations. I don’t believe this is due to rising interest rates, but rather because the pandemic bottleneck is clearing, and the sense of urgency we’ve seen recently, is beginning to dissipate. Over half of our buyers are purchasing with 100% cash, so we are yet to see external financial pressures on the buying-market, but we are suggesting that any vendors teetering on the edge of selling, should consider making the most of the Spring in case the market swings in favour of the buyer later this year. Property prices should start to level off, having increased at a phenomenal rate in recent months, and whilst I don’t believe they will come down any time soon, capital growth should now start to stabilise.”
Kelvin Francis from Kelvin Francis Estate Agents in Cardiff, says that so far, his office has not noticed financial pressures affecting the market. “We believe this is because there is a slight improvement in the number of properties coming to market, together with a last-minute rush to buy and fix mortgage rates, before interest rates rise. So, for now the threat of interest rate rises has tended to fuel the market,” he says.
Francis predicts that over the next few months, the attitude of buyers will move from panic, leading to offers over asking prices, to the more usual situation of offering less than the price quoted and negotiating. “Sales will take longer to agree, as vendors come to terms with the change in the attitude and behaviour of buyers. We are moving towards the end of the 2021/2022 boom,” he comments.
Jack Reid, Founding Director of Orlando Reid in London, says that with interest rates being at an all-time low for so long we were always going to see a rise at some point. “While we have seen steady rises in the last six months with the rate now at 1% this is still much lower than many people will remember. So far, we have not seen much of an impact on the housing market in SW London, although I think it has possibly made some people more wary. I believe that we will only start to see a real impact if the rate climbs towards the 2% level, at which stage I think you will see a lot of first-time buyers put their search on hold and possibly more families deciding not to make that step up in the market. This is when we possibly might see a slight drop in the market. However, I think this is still a while off yet,” he says.
Looking at the remainder of the year, Reid says that as long as interest rates don’t rise too sharply, with the continued high number of applicants he expects the market to remain buoyant with prices staying level. “This area always has a large number of young families and couples looking to upsize so there is always a healthy number of transactions,” he concludes.
