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If, like me, you’re an ardent England rugby fan or indeed a fan of rugby in general, you’ll be counting down the days until the eagerly awaited Rugby World Cup kicks off - or perhaps not, if you watched England’s recent defeat to Fiji.
The customary pre-match friendlies have not made for easy viewing for England fans from injuries, red cards and just some dismal performances, it’s not surprising many have already written off the team’s chances before they have stepped foot in France.
Some of us however will reflect back to 2007 when England pulled it out of the bag to reach the final - almost securing the Cup - after a shocking set of preparations, so perhaps we shouldn’t dismiss their chances too soon.
Much like the realm of sports, housing is another area where it is crucial to not overanalyse and try to pre-empt events too much before they have unfolded.
House price falls were always on the cards and what we are currently seeing in the housing market is nothing unexpected. In fact, given some forecasts had predicted double-digit price drops by now, it could be argued the market is outperforming expectations.
The latest data from Rightmove shows a 1.9% decrease in the average asking price of newly-listed properties during August when compared to July. While the average asking price might be £8,000 (2%) below its peak in May, it remains notably higher by £59,000 (19%) compared to the pre-pandemic market of August 2019.
The current house price dips we are seeing are also somewhat typical for the usually subdued month of August, even without raised cost of living and elevated interest rates to deal with.
From our own experience, we are seeing house prices in some areas remain broadly flat. While we are seeing falls in other areas, it is quite a soft landing given everything else that is happening in the world.
Stock levels are also slowly creeping up as more homes come to the market and properties take longer to sell. Pricing right the first time is paramount in today’s market, taking just 27 days on average to find a buyer for homes that are priced correctly, according to Rightmove. This is less than half the 66 days it takes to find a buyer if the price has to be reduced after coming to market.
While UK Finance data indicates arrears are increasing, we have not yet witnessed a significant amount of repossession activity, which often results in a surge of properties entering the market. I don't believe we are currently at risk of such a scenario, thanks to the recently launched Mortgage Charter. While we are seeing more properties come to market, existing stock is still 10% lower than in 2019, which should ensure no great house price drops.
While we expect to see house price falls of around 2% between now and the end of the year, even this scenario would place us considerably up on pre-pandemic levels. So, while the headlines might point to the ‘biggest house price drops since 2009,’ the movement we are seeing was always expected and, if anything, is actually better than some had predicted.
Last year, first-time buyers (FTBs) dominated the purchasing landscape and it looks like this year will be the same, especially given the increased focus from mortgage lenders for higher LTV products.
As housing prices and mortgage rates begin to decrease, this too could lead to more FTBs entering the market, particularly given the cost of renting. In the typical FTB sector, rents have increased by 12% compared to last year, and by a staggering 33% compared to the same period in 2019, according to Rightmove.
Although the volume of overall confirmed sales in August was 15% down compared to the more typical year of 2019, the FTB segment is displaying greater resilience with only a 10% decline and a 1% increase in FTB demand compared to 2019, Rightmove data shows.
As autumn approaches and the Rugby World Cup kicks off, I remain cautiously upbeat about the housing market. I wish I could express the same confidence for England’s prospects in its World Cup opener against Argentina.
Simon Jackson is Managing Director of SDL Surveying
References;
https://www.rightmove.co.uk/news/house-price-index/
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