Property Natter - Business as usual with the new normal....if the price is right

I was chatting to a genuine city gent the other day (someone who has enjoyed a career in suits, ties, shares and spreadsheets) and, among other things we were talking about the property market.

The inevitable topic of interest rates and conjecture about the the date of their descent cropped up.

‘I’m not so sure,’ he said. ‘I think it would be better if we all get used to a new normal.’

It’s a phrase that’s doing the rounds, isn’t it? ‘The New Normal.’

It could be applied to lots of things going on in the world - many of them deeply distressing - 

but if we restrict ourselves to residential property, on reflection, I think he was broadly right.

Anyone waiting in the wings for interest rates to drop to the levels of 2016 and stay there for years, is likely to be in for a disappointment. The New Normal just doesn’t feel like that.

What does it feel like?

Well, if you’ve been around as long as I have and you can remember the summer of 1990 when interest rates rose to the dizzy heights of 15%, then you’ll consider a base rate of 5.25% to be almost conservative by comparison.

Here’s Kate Steere, housing expert from finance comparison site find.com: "Mortgage approvals have risen for a third month in a row, suggesting that more buyers are starting to accept that the current mortgage rates on offer may well be the new normal. We faced some tumultuous times in December with inflation figures unexpectedly rising and holding steady at the same rate in January, so it’s great to see that buyer confidence hasn’t been knocked.”

After the shocks of Autumn 2022 and the turbulence of 2023, we’re already seeing signs that 2024 will be significantly stronger than 2023.

Transactions in January (a notoriously slow month) were 2% up on the previous month and it looks like the economy is stabilising with the base rate holding firm since September and looking likely to remain there for the next few months.

At the same time, annual growth in regular earnings was 6.2% in the last quarter of 2023 while house prices barely flickered.

Buyers are beginning to return to market. Lucian Cook, head of residential research at Savills, says: “The biggest uptick in activity has been in the £300,00 to £500,000 price band where activity levels in the month were 30% higher than the same time last year.”

But he warns: “Despite increased activity, the market remains price sensitive. The same data indicates that there has been a 52% increase on the number of properties experiencing a change in asking price (compared to the 2017-19 norm).”

In other words, sellers must make sure the price is right!

On the Hunt for giveaways?

Many are looking for a kick-start from Chancellor Jeremy Hunt’s Spring Budget next week. Mind you, there were similar plaintive pleadings before his Autumn Statement which came and went with a ‘phut’ and very little tangible help for housing market.

Of course this time around we’re that much closer to the general election and everyone expects housing to be a major player in the Big Match yet to come.

Of course, the structural problems are on the supply side but its too late to fix the housebuilding problem before polling day so the chances are that his focus will be on buyers. Will we see a return of Help to Buy or something similar? Perhaps.

Or will we see Mr Hunt set his sights on SDLT? A stamp duty holiday, similar to the one introduced by his boss when Rishi Sunak was Chancellor, would have a significant effect in the short-term – although prices would tend to spike during the ‘holiday season.’

And what about the floated plan for 99% mortgages? It sounds good on paper but what about the fear of negative equity? Perhaps buyers are more savvy than that (despite the resilience of the market over the last 12 months) and some of the lenders don’t appear to be massively keen, either.

150 not out

And finally, many congratulations to West Country estate agents, Stags, who celebrate an incredible 150^th anniversary this year. They are marking it by attempting to raise £50,000 for four local cancer charities, Ducks & Drakes in Dorset, SURE in Somerset, FORCE in Devon and the Tanya’s Courage Trust in Cornwall.

Here’s to the next ton-and-a-half.

Until next time.

N

If you’ve have something you’d like us to Natter about, drop us a line at press@estateagenttoday.co.uk