Home buyer demand has dropped by a fifth – 21% – since the recent mini-Budget announcement, while supply has increased as some worried property owners seek to exit the housing market.
According to Zoopla, which carried out the research based on their own data, the drop in demand was greatest in West Midlands (-28%) and South East (-24%), and lowest in Scotland (-11%)
Meanwhile, the number of new sales agreed drop by 15% in last week after an increase in new sales in the first week after mini-Budget as buyers rush to agree sales and use cheap finance.
There has been a surge in new supply of homes for sale jumping 20% in the week after the mini budget – as owners with cheap mortgages look to try and sell their homes – these households will need to be very realistic on the proposed asking price
Asking price reductions have increased as sellers adjust pricing – 4% of homes have asking prices reduced by more than 5% (over £18,500 on average).
But the level of price reductions remains below 2018 levels as full price impact of weaker demand will take time to feed through.
Zoopla’s view on the immediate outlook
The fourth quarter of the year faces a hiatus of new buyers as those who have not secured cheap finance step back from market.
Those with cheap loans arranged before rates moved higher will remain in the market looking to secure a home but uncertainty over the outlook for prices will be a concern and some sellers may need to accept less to achieve a sale increasing the risk of fall throughs.
Zoopla’s analysis suggests that estate agents and brokers will be focused on getting the existing pipeline of business through the system and minimising fall throughs, while the impact of weaker demand and fewer sales will take time to feed through into pricing.
The full impact of house price falls may not become apparent until Q1 2023 as Q4 is a quieter period of new business and the market typically slows quickly from mid-November, according to Richard Donnell, executive director at Zoopla.
Richard Donnell
He commented: “Uncertainty amongst home buyers has dented housing market activity. After an initial scramble from those with cheap loans to agree sales, the last week has seen buyer interest drop by a fifth.
“The final few weeks of the year will be about closing out existing deals with agents, mortgage brokers, buyers and sellers facing increased down-valuations and general concerns about prices falling in 2023. Those with cheaper mortgages will continue to seek out homes to buy providing some support to market activity.
“We have seen a spike in asking prices being cut but at levels that remain below what we saw in 2018. The impact of weaker demand on pricing will take time to feed through and won’t become clear until the new year as many would-be sellers, especially those without cheap finance, will step back from the market and review what the outlook is like as we enter 2023.
“While we have seen a lot of focus on mortgage rates its important to note that a quarter of buyers don’t use any mortgage and many more have small sized loans so the higher cost of borrowing will mainly hit those seeking larger sized loans.”
SOURCE: Property Industry Eye | OCTOBER 14, 2022 | MARC DA SILVA
Estate Agents
Comments