Jonathan Rolande: Separating fact from fiction

The National Association of Property Buyers’ Jonathan Rolande gives his take on another manic week for the property market.

Like many working in the sector, I am preparing to go on a summer holiday knowing full well I will be keeping one eye firmly on the news. 

House price crashes, record repossessions and landlords leaving the sector in droves. 

These form just some of the apocalyptic predictions many people are making about the property sectorThe National Association of Property Buyers’ Jonathan Rolande gives his take on a manic week for the property market. right now.
But what’s fact? And what’s fiction?

On house prices I think we are likely to see a further 5% eroded from sale prices this side of Christmas. 

Those who are employed within the property sector should be concerned not so much with price falls, but instead by the reducing sale numbers. 

This is starting to indicate a shift in the market where many homeowners are opting to wait and see what happens to the market and interest rates, and those that are trying to sell are not yet reducing their prices by enough to encourage the smaller number of buyers now looking. The second half of 2023 looks to be quite bleak for many estate agents who will be unable to build up the financial reserves needed to see them through what is likely to be an even more challenging Winter market.”

In the rental markets further rises in borrowing rates look likely and the supply of rental property is likely to reduce as landlords sell and aren’t replaced with new entrants, challenging times lay ahead for tenants. Expect further rises in rents although at a slower rate than we have witnessed. We will soon reach a point where further steep rises simply aren’t sustainable.” 

It leaves you wondering, without capital growth, who would choose to be a landlord? Higher rents have gone some way to balance the books but many with a mortgage do little more than cover the interest each month. More landlords will try to quit this year but the number may not be as high as feared. This is because capital values and saleability will fall leading many landlords to take a wait and see approach.”

With regards to mortgages, we are yet to see the hoped for interest rate war to attract customers that might have driven down rates. Instead, gloom in the markets has made the opposite happen. Rates have risen even before the Bank of England hiked base rates which is unusual and worrying. 

Mortgages will almost certainly become even more expensive as we enter the second half of the year and higher rates are now the new normal.”
In terms of the next six months, the traditional dip in sales during the holiday season is almost upon us. 

Expect sales volumes to fall over the next six weeks exacerbating the downward pressure on prices. 

The normal bounce in September is likely to be very subdued as the burden of increased interest rates begins to bite. Those with an existing mortgage are more unlikely to move upmarket, landlords – at least those requiring a mortgage – are not expected to add much volume to their portfolios and many more will exit altogether, selling in the autumn market. 

With the current circumstances, a price freefall is very unlikely but an increased supply of property and reducing buyer numbers will inevitably lead to anxious sellers slashing prices to attract a diminishing number of purchasers. In terms of property, it looks like there is a very bleak winter ahead.