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Crystal ball gazing into the property market’s future – Baguley

by: John Baguley, director of risk and compliance at Countrywide Surveying Services
  • 03/07/2023
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Crystal ball gazing into the property market’s future – Baguley
It’s that time of year to crystal ball gaze into what might lie ahead and to also reflect on events that have gone before.

A week in politics is said to be a long time and maybe that’s a saying which should be extended to the housing market. At the moment, a week in property seems like a very long time. Just a few weeks prior to writing this piece, the market seemed to be stabilising, swaps rates were holding steady, predictions around interest rates suggested we were close to the peak, mortgage availability existed and everything looked as rosy as it could look following the turmoil of last year’s mini budget.

Fast forward a matter of days and the dark clouds reappeared. Swap rates increased, predictions around interest rate rises have re-emerged to suggest the peak might now be post five per cent and talk of a recession has entered the vocabulary again. It seems daily, if not hourly, that another commentator or article emerges with pretty sobering headlines. 


So, what does the future hold? 

A rhetorical question perhaps, but what events of the last three years have taught us is that, generally speaking, the property market is amazingly resilient. Commentators in the immediate aftermath of the global shutdown suggested that markets would never recover, our shift in working practices would render city centre living redundant and home working would cause a seismic shift in the way we view property. It’s fair to say that some predictions came true, we did work from home and for a short time we left city centres in volumes not seen before. But where are we now? 

City centre living has returned, property did not fall off a cliff (metaphorically speaking that is), demand – despite the turmoil of late last year – remains and property values – whilst we are seeing some minor adjustments downwards have not fallen to the levels some commentators are suggesting.  

Let me repeat that the property market is amazingly resilient, and this is supported by a supply and demand imbalance which is further exacerbated by the levels of new build falling.  

However, to ignore the headwinds would be a fool’s game. We know large volumes of fixed rates are coming to an end and without a reduction in interest rates, the rate shock – certainly for those currently sitting on fixed rates of around one per cent – will be significant and many households will feel the financial squeeze which may even put some close to distress. But mortgage applications were indeed stress tested to cope with higher rates. 

A healthy housing market permeates across so much of UK Plc. Individually, its equal to a warm sunny day, economically, it’s a massive contributor to the public purse – VAT, stamp duty, employment, indirectly and directly – the net contribution is significant.  

To successfully navigate the challenges ahead we need a joined up and coherent housing policy and to pose some pertinent questions. 


Is stamp duty still relevant? 

How many transactions don’t even start just because the cost of moving is so significant? 

To move forward, we need faster transactions, better informed consumers at the outset, so the time to move is reduced.  Most of all we need monetary policy to reflect the impact constant rate rises have on so much of the economy, most certainly the housing market.  

Not wanting to stray into economics, as this is most certainly not an area of expertise, but is there a different way to manage supply side inflation compared to inflation created by excess demand? 


Where will the rest of 2023 take us? 

Some of it is quite certain, higher interest rates seem inevitable. What we do know is that the economy remains in growth, inflation will fall, employment is still comparatively strong and the housing market is resilient.  

Minor price adjustments? Yes. Wholesale collapse? That seems extremely unlikely.  

Maintaining confidence, avoiding unfounded knee-jerk reactions and a realistic, proportionate approach from folk right across the property food chain please. Talking the property market into recession helps nobody. 

The remainder of 2023 and 2024, to an extent, can be what we make of them. 

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