Now is the time for good agents to thrive

The Guild of Property Professionals CEO, Iain McKenzie, recently spoke to Damon Bullimore, CTO of nurtur.group and Founder or BriefYourMarket, about the housing market data and statistics surrounding the current market. 

“Looking back at the market in 2008, I wouldn’t say there is any similarity to what we are seeing at the moment,” says Bullimore. “There is a core difference, in that 2008 was an institutional crash with no monetary flow in the market and banks not lending any money, this is in complete contrast of what we are seeing today. What we are seeing in this market is a reaction to a poor mini-budget which had a direct impact on the market, an impact we have seen pull through in the data with the number of fall-throughs trembling. However, I am pleased to say that was a short, sharp shock and directly correlated to the mini-budget.”

Bullimore says that moving forward since then, stats reveal that the market has calmed down from the initial reaction to the mini-budget, however, high inflation has resulted in the rising interest rates we are currently experiencing. “There is some interesting data that suggests that unless interest rates rise to over 8%, there is no direct correlation between interest rates and the housing market. I think what is important to say is that 5% to 6% interest rates, which is where I think they will stabilise, is actually a normal market, especially when looking at historical data where we see interest rates north of 14%. There is an interest stat that says anyone under the age of 26 years old has never seen interest rates higher than 1.5%, however 5% to 6% is still considered a good rate at which to borrow money. It is obviously more expensive than what we have seen over the past years, but still far more accessible than 14%,” he comments.

McKenzie says that when looking at data around mortgage transactions and interest rates, there were 108,000 transactions per month when interest rates where at 15.4%, which is higher than the number of transactions when the interest rate was at 0.01% in 2007. “Interestingly, the optimum period was when interest rates were at 7% to 8%, because it comes down to sentiment and confidence in the market rather than rates,” he adds. “Talking to people about why they purchased a property in the 1990s with interest rates over 15%, there is generally two answers, the first being they had no choice because they had to, and the second was because they didn’t know any different.”

Bullimore answers saying: “I think it is about people adjusting and getting comfortable with the new environment. When you have an environment where you can borrow at 1% and then, suddenly, it changes to 5% or 6%, it feels so aggressive, however, as I mentioned, it is still a great deal.”

He says that going back to the BriefYourMarket data from the last month, there is still over one million properties on the market, and from 1 October 2022, 147,161 came to the market. “This points to the fact that there is still activity, with 103,012 properties that were Sold Subject to Contract (SSTC) during that time frame. I still believe based on this data that next year we will see post a million transactions,” Bullimore comments.

McKenzie retorts, “It is all about transactional volume. We know that good agents will navigate the waters of price increases or declines, however, transactional volume is the important thing. Good agents will always thrive and survive, so now it is about focusing on the day-to-day aspects that will benefit them in the current market.”

Bullimore agrees, adding that in a hot market, vendors rarely move from one agent to another, however, since October, 21,876 properties have moved agents. “That shows you that people are really starting to focus on who is the market leader in the area, and who can sell that property. In a hot market, there is an element of the property selling itself, but now, we will see the cream rise to the top and good agents thrive, and the transactions are there to be able to thrive,” he concludes. 

To listen to the full conversation, visit The Home Stretch podcast.