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Land Registry Dec HPI – “a correction is looking increasingly likely” property and mortgage experts react

by | Feb 15, 2023

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Following the Land Registry December HPI published this morning, Newspage asked brokers and property experts for their thoughts.

Sofia Jones, Managing Director at London-based independent mortgage broker, Penny House“Though annual price growth is now back in single digits, and prices fell by 0.4% in December, I think we will see less of a property crash than many have been predicting. A correction is looking increasingly likely. With inflation edging down more than expected, we’re now likely to be near the top of the current base rate increase cycle. Once inflation is back to target, we may even see the Bank of England cut rates to stimulate the economy, which will support house prices and reignite demand. That being said, though demand has fallen since the mini-Budget, it has by no means dropped off a cliff. The start of 2023 has been very busy for estate agents and mortgage advisers, and there’s still a lot of competition for property. Given the lack of supply, prices are unlikely to fall as much as we all felt back in October when the fallout from the mini-Budget was intense.”

Charlie Lamdin, property expert at Moving Home With Charlie: “Everyone is underestimating how many downward pressures there are on house prices, and how long they will remain in place. Even if there is the occasional month of ‘stabilisation’, we are at the beginning of a long downward trend in average house prices. Land Registry figures only include around 40% of transactions so they are not an accurate measure, and are subject to revision for up to 13 months. Prices will not bottom out until 2024 at the earliest. There is very little transparency on what is happening at the coal face of transactions, but we know that transaction numbers are around 15% down on their pre-Covid 5-year average. It’s not a lack of demand that’s the problem, as there is still plenty of interest and desire for property. It’s a lack of available finance to pay last year’s prices, which is what sellers are holding out for.”

Sharon Hewitt, MD at Beaconsfield-based relocation company, Chiltern Relocation: “Prices may be nudging down but we are not witnessing the sharp slowdown many predicted. On the contrary, we have received more enquiries at the start of the year than last year and, in our daily conversations with estate agents, they are happily reporting a strong start to the year with higher viewings levels than they expected. Our enquiries are from downsizers, clients relocating for job moves and clients moving out of London due to the ongoing working from home trend. Rumours of the property market collapsing 20% are so far unfounded.”

 
 

David Conway, director of Woodford Green-based mortgage broker, Clayhall Financial Services“December was juddering, but the property market was buoyant in January. There’s almost a ‘feel good factor’ emerging as buyers are surprised at being able to access fixed rates of around 4%. Mortgage rates are on a downward spiral. Lenders are actively competing for buyers’ business and they are also being innovative in the buy-to-let market. With affordabilty and lending calculations expected to improve, unemployment now predicted by the Bank of England to not rise as much as expected and inflation slowly getting back under control, 2023 should be a year of recovery not carnage. The projected house price drops should be nothing but a blip.”

Zaid Patel, director at London-based estate agents, Highcastle Estates“Though this data shows that prices are slowly edging down, properties are still selling and the market hasn’t collapsed. We just sold a property 4.4% below the asking price, which isn’t too bad at all in the current climate. There are fewer first-time buyers in the market, though. Vendors are more open to accepting offers slightly lower, as long as it’s reasonable and feasible for them. There is still activity but estate agents and mortgage brokers need to play a big part to educate sellers and buyers on the housing market’s current status to manage their expectations.”

Austyn Johnson, founder at Colchester-based Mortgages for Actors: “There shouldn’t be a house price crash, as over the years, lenders have been adapting their processes to make sure there is a buffer to minimise struggles caused by rising rates and employment issues. People are also getting savvy and a lot of people who have been made redundant have gone self-employed to keep some money coming in. This is a correction, and bit by bit, the corrections should smooth over the wobble and create some stability. Here’s hoping anyway. When the McDonald’s drive-thru is empty every day, then I’ll worry.”

 

Rhys Schofield, managing director at Derbyshire-based mortgage advisers, Peak Mortgages and Protection“Adam Smith popularised supply and demand in 1776, a concept that most of us understand. At the core of our broken property market is that there are not enough houses to go round and the gap gets worse each year as we don’t build nearly enough new ones, which means prices can only really go one way. Those doom-mongers talking up a crash are likely to be disappointed this year in what just feels like a normal pre-Covid market. Business is brisk and rates generally aren’t as bad as people had actually feared for normal residential customers.”

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Director of Benham and Reeves, Marc von Grundherr, commented:

 
 

“A combination of economic turbulence, increasing mortgage rates and a squeeze on household finances has been the perfect recipe for a reduction in the rate of house price growth and that’s what we’ve seen since the closing stages of last year.

When you also couple these factors with the usual seasonal slowdown that hits the market during December, it would have been more of a surprise had house prices continued to climb. 

However, what’s important to note is that the rate of decline has been far more marginal than many predicted and this should stand the property market in very good stead for the year ahead.”

 
 

CEO of Alliance Fund, Iain Crawford, commented: “The property market has gone through a transitional period, whereby buyers have had to reassess their purchasing power, while sellers have had to come to terms with this reduction and make the necessary adjustments to their asking price expectations.

This has caused house prices to fall gradually over the last few months, but there’s already signs that having found a new middle ground, the market has stabilised in 2023.”

Managing Director of Barrows and Forrester, James Forrester, commented: “It’s been a long cold winter, with harsh economic headwinds battering the UK on all fronts, so it was only inevitable that they would breach the usually impervious walls of the UK property market at some point. 

 

The good news is that while house prices have started to cool, the damage has been less severe than forecast and although we’re not out of the woods just yet, we can now see the sunlight through the trees.”

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