Sellers settling for “middle ground” still turn a profit - Propertymark

Propertymark says that sellers who strive to find a “middle ground” in today’s difficult market can still turn a healthy profit on their homes in most cases.

The comment comes in the trade body’s response to the latest Halifax house price index, which shows that average house price fell by 0.3 per cent in July, a fourth consecutive monthly decline, meaning property prices have dropped by 2.4 per cent on an annual basis.

This is actually a lower annual fall than the 2.6 per cent recorded in June. 

So while a typical UK home now costs £285,044 against a peak of £293,992 last August, the Halifax points out that average property prices are still some £45,000 (that’s up 19 per cent) above pre-Covid levels.

Nathan Emerson, chief executive of Propertymark, says: “Even though house prices have fallen year-on-year, this does not compare to the dramatic price rises that we experienced last year. As house prices begin to steady, and with recent rises in wages, houses are becoming more affordable while equity is remaining stable. 

"After recent positive inflation news bringing the potential for a peak in interest rates sooner than previously expected, there is also some hope that fixed mortgage rates will start to fall. Even as they remain high compared to recent standards, buyers are able to negotiate on price and come to a middle ground with sellers still able to make a healthy gain on the final sale price." 

And Jeremy Leaf - the north London estate agent and former RICS residential chairman - says the market on the ground is still surprisingly robust.

”A growing expectation that inflation and interest rates are nearing their respective peaks, combined with continuing strong employment, are all helping to underpin activity. Affordability is still a concern, especially for those on tighter budgets, often buying smaller properties so the market remains price sensitive. Nevertheless, sellers recognising the importance of proceedable buyers and that the illusive golden offer may not be achievable, are taking advantage” he notes.

Iain McKenzie, chief executive of The Guild of Property Professionals, adds: “The outlook for the property industry is not as gloomy as forecasts suggested at the beginning of the year. If the market was as weak as many predicted, house prices would be tumbling right now. 

“Instead we are seeing a gradual readjustment in house prices, but we are still way above pre-pandemic levels, much to the disappointment of first-time buyers. The main summer months of July and August are generally slow periods for the property market, as house hunters shelve their searches for holidays. This impacts prices, as sellers in a rush to move may be inclined to lower their asking price to entice buyers in.”

He says that the squeeze will inevitably hit volumes, however, and the Guild anticipates around 20 per cent fewer sales this year compared to last.

Tom Bill, head of UK residential research at Knight Frank, sees the data this way: “The journey back to long-term rate normality has been fraught and put downwards pressure on house prices and sales volumes over the last year. The previous government went too far, too fast for financial markets and the Bank of England has been accused of doing too little too late. 

“However, some lenders are cutting mortgage costs as the bank rate nears its peak, which means that while sentiment will remain subdued, it should improve in the second half of this year. 

“While we expect UK prices to fall by 5.0 per cent in 2023, demand should prove more resilient than expected given the shock-absorber effect of strong wage growth, lockdown savings, the availability of longer mortgage terms, forbearance from lenders and the popularity of fixed-rate deals in recent years.”