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Two senior estate agency figures have given their views on the prospects for the property market as commentators warn that longer-term mortgages as well as rising inflation, increasing interest rates and an impending recession could all combine to create a housing market crash.
Kevin Shaw, national sales managing director for Leaders Romans Group (LRG), claims a crash is unlikely as buyer interest remains steady despite economic concerns, while industry veteran Murray Lee of London-based Dreamview Estates is urging first-time buyers to delay purchases.
Shaw said: “Fears around a ‘burst bubble’ or a radical drop in house prices are unlikely. We aren’t seeing a significant drop off in buyer interest and despite higher mortgage rates, demand remains steady.
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“In fact, Zoopla’s House Price Index July 2021 figures show that property demand still remains 25% above average over the last five years, on a par with year-on-year figures.
“Following the stamp duty-led home-moving frenzy of 2021, there's still a striking mismatch between supply and demand of properties, with housing stock at a particular low. As Halifax has noted, the ongoing supply-demand imbalance led property prices to rising year on year in June by 13%, the highest since late 2004.”
However, Shaw does acknowledge that growth will remain static.
He adds: “Although we won’t see rapid rises or huge slumps in pricing in the remainder of 2022 we do see the signs of a levelling off of housing prices.
“Given the Bank of England interest rate hikes, higher mortgage rates and the cost-of-living crisis impact on home buyers, house price growth looks to remain relatively static for the remainder of the year, with the cost-of-living crisis likely to impact the number of homes being sold. We expect slower growth, but no significant fall over the medium or long term.”
Shaw predicted a rush to mortgages, adding: “Mortgage interest rates have been rising quickly in 2022 off the back of five increases to the Bank of England base rate. This summer’s further interest rate increase to 1.75% − the sharpest for more than a quarter of a century means mortgage lenders will once again increase their rates.
“When interest rates change, it always creates a flurry of new applications, leading to a backlog that can take weeks to clear. We expect to see people who are looking to buy or those looking to re-mortgage in the next six months try to secure a mortgage rate as soon as possible to avoid further rate increases this year.”
Shaw suggested the property market in the North West is set to flourish.
He explained: “Despite a general cooling, LRG is continuing to see house price inflation in the North West and we expect to see continued housing price growth in the region for the rest of the year.
“The North West of England is an area that has particular supply and demand imbalance, with Liverpool and Manchester two of the leading cities for property demand – causing a rise in value.
“Outside the major cities, demand for properties in Warrington in particular has seen growth of up to 70% above the five-year average while Oldham follows at 65% and Preston at 60%.
“As Rightmove data for July 2022 shows, the region is seeing an 11.2% YoY house price increase from July 2021, along with a 0.8% increase month on month from June. That’s compared to a 0% growth in the South East and -2.9% decrease in Wales.”
In contrast Lee, who has been an agent for almost 50 years, has revealed his advice to buyers is currently to buy if you need to but to wait if you are not in a rush.
Speaking in a video interview with BestAgent founder Charlie Lamdin, Lee said: "My personal view is I think we are looking at a downturn in the market.
"I have seen ups and downs and ups and downs, it levels out eventually.
"We are in a hiatus because of the shortage of property which has forced the market up dramatically, that will level out because of the economic situation.
"If people are saying should I buy now, if you need to then the answer has to be yes.
"If you can take your time and keep an eye on the market, perhaps the answer is to wait and see what happens
"That may not necessarilly be great advice for my other estate agents, but it comes back to the word trust, you have to give bad advice and good advice.
"We dont know how bad it will get, my advice is if you need to buy keep on going, if you don't then keep an eye on what the market is doing."
Meanwhile, former agency founder and property marketing veteran John Durrant has also drawn on his own experience of working during the 1970s to highlight parallels with the effects of war, rising energy bills, soaring inflation and the subsequent consequences on interest rates, bank lending and eventually home buying and selling.
He said in a LinkedIn post: “This seems the right time to be extremely cautious with marketing appraisals even if it means losing some instructions.
“Agents might also take a good look at their existing listings - if there are any that they feel might be ambitiously priced then better to be proactive now than see the value slide if you wait too long to share your concerns with your vendor.”
Durrant warned that former chancellor Rishi Sunak’s Stamp Duty holiday created a housing bubble that was not sustainable.
He said: “This left a vacuum that other families were not ready to fill because many would not have realised they would need to move, and for others, the savings on stamp duty were worth less than the inconvenience of bringing their plans that far forward.
“Thus, we experienced a log-jam, a shortage of properties coming to the market that in turn ensured self-sustaining rapid price increases. A false market! A damn waiting to burst. If vendors can’t see other houses to buy and prices are rising rapidly, why would they risk marketing their own homes?”
Durrant warns that economic conditions are changing rapidly - just as they did in the 1970s, adding: “The data suggests we are at the genesis of that. Now is the time to advise extreme caution.
“If you think about it, there are probably thousands of agents who have only ever experienced a sellers' market. They will find it difficult to accept that a market can change from what they've known throughout their career. But it can. If those agents carry on doing what they've always done, the chances are that it will be bad for them.
It's likely that different parts of the country will respond faster than others. In other words, not everyone will be experiencing a slowdown just yet. Time will tell.
“Writing about this makes me feel really vulnerable. I don't like the words I'm writing one little bit. And yet, I feel I must.
“I really hope I'm wrong. But if I'm right then I believe that this upcoming market will see professional agents succeed and come out stronger because of it. Sadly, I believe others will fail. Time to step up.”
Giving an opinion of the likely direction of the 'market' is extremely difficult, but I can comment on what is happening here in SW London - now. We're seeing some minor evidence of a return to a more seasonally driven housing market after a quiet summer. We remain hopeful that there will be a pick-up in activity in the autumn, but this may be wishful thinking on our part. We have been turning down some sales when we believe other agents have overvalued to obtain the instruction. For example, a client asked us recently to sell a property for them; another agent suggested an asking price of £750,000, and three months later, the best offer they have is £662,500.
This indication of a more normalised market; is a far cry from the frenzy which began in the early stages of the Covid pandemic, where it was frantically busy all year round as buyers competed for limited stock. This has pushed some vendors to believe they can still obtain these high prices.
As we've noted for a while, stock levels here in SW11 have continued to increase. Since February, there has been a consistent increase in stock levels, with the highest available stock level now for many months. However, there are also fewer active buyers as people are more inclined to take a holiday now that things have returned to normal.
With buyers potentially spending less time on their housing market searches, this will have the effect of stock levels continuing to grow.
While buyers say they remained committed to buying (at least in certain parts of the market), we remain less confident that these commitments will turn into actual sales. The market's hot spots are the larger family houses with outside space. Flats without outdoor space are struggling to sell unless keenly priced. The article in today's Daily Telegraph will make a grim read for anyone thinking of dipping their toe into the housing market, suggesting there could be a 12% fall in values.
With more stock available on the market for buyers to choose from, sellers are becoming less confident of their homes selling as quickly as they might've done previously.
Rightmove data confirms that since the 1st of August, out of the seven hundred and eighty-nine properties listed for sale in SW11, there have been eighty-nine price reductions (11.2%). During the same period, one hundred and twelve new properties came to the market, while only eighty-four have gone under offer. In SW11, 384 properties have been on the market for more than 26 weeks and a somewhat alarming 103 properties for 52 weeks.
Activity will likely slow down in the coming months due to the re-emergence of these more seasonal norms and as more bad news filters through. However, from experience, what happens in London ripples into the rest of the country.
Buyers are understandably being more cautious after the recent significant interest rate rises as the Bank of England attempts to bring inflation under control. However, these increases in Base Rates and the forecast for more to follow in the coming months bring some dark clouds to the landscape.
We advise sellers to ensure their property is correctly priced if they are serious about selling.
The temptation for agents when there's talk of a downturn will be to cover their ears and sing, 'la la la' but for anyone interested, there is a more complete account of my experiences in the 1973 market on LinkedIn. I can't post links in this forum so feel free to connect with me via that platform if you would like insight into how we survived. Charlie Lamdin has kindly added the post to his Best Agent Linkedin account as well so you can pick it up there.
There are a lot of similarities between 1973 and now and it feels as though history is repeating itself - rampant inflation, war, industrial unrest, and so on. The main takeaway I hope agents will gain from this is that a lot of us came out stronger from that market than when we went in and that this time around, forewarned is forearmed - back then we were clueless and we ended up going from 6 instructions to over 600 and being ordered by our bosses to disinstruct ourselves from hundreds of houses where the vendors were not willing to reset their price to take account of what had become a sliding market. Think of what we would have saved if we had been sharper and not taken those houses on in the first place!
If you're detecting a downturn then consider that the reasons might be something other than it being August. I appreciate why this is a popular theory but try also to put yourself into the shoes of buyers reading this headline in the Telegraph: “A ‘tsunami of repossessions’ will hit house prices”. I guarantee there will be more headlines like this soon. Be honest, if you were a FTB faced with the spectre of ever-increasing household bills probably exceeding an additional £400 a month over what you had expected, would you be rushing to buy at the moment? A market without FTB's isn't a market that's easy to live with.
I THINK that we are approaching the time (if we're not already there) to be extremely cautious with your advice to prospective vendors. Nobody can be sure about the future but there are factual reasons for concern if you read my LinkedIn post.
If you're seeing a change in the market and you're honest with your vendors about that then you'll likely lose instructions to more gung-ho agents - but chances are that you will win those back down the line when they don't sell. Don't take it personally when that happens. Just keep in touch and let them know you're there for them if things don't work out.
If all agents could accept that taking the foot off the accelerator is a good thing, then if/when there is a crash, there will be less damage and recovery will be faster. IF the market is about to go into reverse, you'll also be doing your clients a massive favour because when the market slides, there's nothing worse for the client or more damaging to your professional ego than eventually selling a house for 10% (or more) less than the price you initially advised. It happened in 1973 it will happen again.
Good luck everyone. I REALLY hope this won't be a repeat of 1973 but we live in times that are of great uncertainty. All I'm saying is, please be careful out there. Also, if you do find those good buyers are in short supply, the best way to attract their interest will be by having the best houses to sell. So - really look after your best buyers AND your best vendors - the ones who are listening to you.
I truly believe that times like this play into the hands of professional estate agents. Those who are the best at property marketing, understanding what motivates people, and applying their knowledge in real-time will survive. Others might not do so well.
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Giving an opinion of the likely direction of the 'market' is extremely difficult, but I can comment on what is happening here in SW London - now. We're seeing some minor evidence of a return to a more seasonally driven housing market after a quiet summer. We remain hopeful that there will be a pick-up in activity in the autumn, but this may be wishful thinking on our part. We have been turning down some sales when we believe other agents have overvalued to obtain the instruction. For example, a client asked us recently to sell a property for them; another agent suggested an asking price of £750,000, and three months later, the best offer they have is £662,500.
This indication of a more normalised market; is a far cry from the frenzy which began in the early stages of the Covid pandemic, where it was frantically busy all year round as buyers competed for limited stock. This has pushed some vendors to believe they can still obtain these high prices.
As we've noted for a while, stock levels here in SW11 have continued to increase. Since February, there has been a consistent increase in stock levels, with the highest available stock level now for many months. However, there are also fewer active buyers as people are more inclined to take a holiday now that things have returned to normal.
With buyers potentially spending less time on their housing market searches, this will have the effect of stock levels continuing to grow.
While buyers say they remained committed to buying (at least in certain parts of the market), we remain less confident that these commitments will turn into actual sales. The market's hot spots are the larger family houses with outside space. Flats without outdoor space are struggling to sell unless keenly priced. The article in today's Daily Telegraph will make a grim read for anyone thinking of dipping their toe into the housing market, suggesting there could be a 12% fall in values.
With more stock available on the market for buyers to choose from, sellers are becoming less confident of their homes selling as quickly as they might've done previously.
Rightmove data confirms that since the 1st of August, out of the seven hundred and eighty-nine properties listed for sale in SW11, there have been eighty-nine price reductions (11.2%). During the same period, one hundred and twelve new properties came to the market, while only eighty-four have gone under offer. In SW11, 384 properties have been on the market for more than 26 weeks and a somewhat alarming 103 properties for 52 weeks.
Activity will likely slow down in the coming months due to the re-emergence of these more seasonal norms and as more bad news filters through. However, from experience, what happens in London ripples into the rest of the country.
Buyers are understandably being more cautious after the recent significant interest rate rises as the Bank of England attempts to bring inflation under control. However, these increases in Base Rates and the forecast for more to follow in the coming months bring some dark clouds to the landscape.
We advise sellers to ensure their property is correctly priced if they are serious about selling.
The temptation for agents when there's talk of a downturn will be to cover their ears and sing, 'la la la' but for anyone interested, there is a more complete account of my experiences in the 1973 market on LinkedIn. I can't post links in this forum so feel free to connect with me via that platform if you would like insight into how we survived. Charlie Lamdin has kindly added the post to his Best Agent Linkedin account as well so you can pick it up there.
There are a lot of similarities between 1973 and now and it feels as though history is repeating itself - rampant inflation, war, industrial unrest, and so on. The main takeaway I hope agents will gain from this is that a lot of us came out stronger from that market than when we went in and that this time around, forewarned is forearmed - back then we were clueless and we ended up going from 6 instructions to over 600 and being ordered by our bosses to disinstruct ourselves from hundreds of houses where the vendors were not willing to reset their price to take account of what had become a sliding market. Think of what we would have saved if we had been sharper and not taken those houses on in the first place!
If you're detecting a downturn then consider that the reasons might be something other than it being August. I appreciate why this is a popular theory but try also to put yourself into the shoes of buyers reading this headline in the Telegraph: “A ‘tsunami of repossessions’ will hit house prices”. I guarantee there will be more headlines like this soon. Be honest, if you were a FTB faced with the spectre of ever-increasing household bills probably exceeding an additional £400 a month over what you had expected, would you be rushing to buy at the moment? A market without FTB's isn't a market that's easy to live with.
I THINK that we are approaching the time (if we're not already there) to be extremely cautious with your advice to prospective vendors. Nobody can be sure about the future but there are factual reasons for concern if you read my LinkedIn post.
If you're seeing a change in the market and you're honest with your vendors about that then you'll likely lose instructions to more gung-ho agents - but chances are that you will win those back down the line when they don't sell. Don't take it personally when that happens. Just keep in touch and let them know you're there for them if things don't work out.
If all agents could accept that taking the foot off the accelerator is a good thing, then if/when there is a crash, there will be less damage and recovery will be faster. IF the market is about to go into reverse, you'll also be doing your clients a massive favour because when the market slides, there's nothing worse for the client or more damaging to your professional ego than eventually selling a house for 10% (or more) less than the price you initially advised. It happened in 1973 it will happen again.
Good luck everyone. I REALLY hope this won't be a repeat of 1973 but we live in times that are of great uncertainty. All I'm saying is, please be careful out there. Also, if you do find those good buyers are in short supply, the best way to attract their interest will be by having the best houses to sell. So - really look after your best buyers AND your best vendors - the ones who are listening to you.
I truly believe that times like this play into the hands of professional estate agents. Those who are the best at property marketing, understanding what motivates people, and applying their knowledge in real-time will survive. Others might not do so well.
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