Oct 22 Market Update

October, 2022

If you plan to buy or sell a home, you'll want to know what's going to happen to house prices and whether now is a good time to move. Whether you already own a home or are a first-time buyer, a decrease in house prices can be advantageous. A decrease in the price of the area in which you want to buy can save you money, whereas an increase in the value of your current property means you can secure a good price and have more capital to invest in your next purchase.

A variety of factors influence house prices, including:

Economy: Both the unemployment rate and wage growth affect consumer confidence, which influences how willing people are to move and how much they are willing to pay.

Competition: Local house prices will be determined by how desirable a specific location is and how many comparable properties are available. If, for example, a new housing development is completed, the value of nearby properties may fall due to increased competition for buyers. Some properties, on the other hand, will always command a premium because they are in a desirable location with limited housing stock.
Interest rates:
Interest rates are set by the Bank of England, and if they are relatively low, people can afford to spend more on a home because the cost of borrowing is lower. This tends to drive up house prices. Mortgages become more expensive as interest rates rise, and house prices change at a much slower rate as fewer people choose to move.

Norwich Estate Agents

What has happened to housing prices?
There are several reliable sources of data on house prices, including monthly indices that show changes in house prices over the previous month and the previous year.
The UK House Price Index is the most accurate of the house price indices because it is based on completed sales, both cash and mortgage sales. The extensive data comes from the HM Land Registry and other government agencies. However, while it provides a clear picture of what is happening in the housing market, the data is published with a lag. The most recent available data is for June.
It revealed that the average house price in the UK had risen by 1.0%, following a 1.2% increase the previous month, with a 7.8 percent year-on-year increase.
What is causing the price change in the property market?
Over the last two years, the housing market has been volatile, with the pandemic having a direct impact on house prices. There was an initial slump as the country went into lockdown for the first time in March 2020, followed by a massive resurgence beginning in June 2020, when society began to open again. The introduction of a stamp duty holiday on 8 July 2020, which offered buyers a tax saving of up to £15,000 when purchasing a house, was a key driver. This acted as a stimulant, driving house prices up by an average of £15,409 between June and November 2020, according to Halifax data, effectively cancelling out the stamp duty savings.
The main stamp duty holiday ended at the end of June 2021, with a tapering until the end of September, when first-time buyers could save up to £2,500. House prices rose in the run-up to the deadlines for the completion of each of these phases, resulting in double-digit annual growth through 2021. This was aided by historically low mortgage rates and the reintroduction of higher loan-to-value mortgages.
It’s not certain what will happen to house prices next, with most analysts predicting a return to more normal levels. Another increase in the Bank of England's base rate in August 2022 will make borrowing more expensive, taking some of the sting out of the market, while the pressure of rising living costs will also dampen it further.

Is now a good time to move house?
With the Bank of England increasing the base rate several times in recent meetings and the likelihood of further increases in 2022, borrowing may become more expensive, limiting the amount you can secure for your home purchase.
With house prices at an all-time high, we could see them begin to flatten in the coming months, which could save you money if you are a first-time buyer or moving to a new area. If you are relocating and must sell your current home, it may be advantageous to take advantage of the tail end of the recent housing price boom.
Many Norwich estate agents report that demand continues to outstrip supply, owing in part to movers being priced out of expensive areas such as Colchester and London and relocating to Norwich, which is within commuting distance of these areas. This means that buyers must be quick-thinking and decisive when looking for a home.
How do I know what my property is worth?
While it is important to consider overall market trends in the UK, it is also important to understand what is going on in the Norwich area if you are planning to buy or sell a home. It pays to do your homework because the price of a house on one street can vary greatly from the same style of house on another. We provide a free, no-obligation online valuation of your property, which will give you an idea of what you could expect to get. You can do so by clicking on the link provided below.

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