Downsizers are set to sell the family home while prices may dip and sales demand continues as a new reality impacts the property market, according to leading estate agents Winkworth.
Winkworth’s Chief Executive Dominic Agace provides vital market insights in the latest episode of its Property Exchange podcast in the aftermath of Trussonomics and with a new Budget set to be delivered next week.
He told the podcast: “It has been a dramatic time since the mini-Budget with the crisis around gilts and an increase in interest rates but things are looking a little rosier. We have looked at demand and at the height of the turmoil at the end of September/early October, there were seven applicants for every property compared to 10 applicants for every property before the Mini-Budget. However, when you compare this with 2019, there were seven applicants for every property, roughly the same as now. The market lives off momentum. There was huge momentum due to low interest rates, with prices up by 20 per cent. What we are seeing now is a slightly earlier Christmas as people settle down to the new environment with interest rates and the cost of finance. We may see 5% coming off prices this year but that is in the context of 10% price increases this year and 20% over the past two years in some areas.
“We will see larger properties coming on to the market, with energy costs, building and maintenance all up. Downsizers will take that step forward and there will be more opportunity to buy that once in a generation house, which may have been with one family for over 30 years.”
He added: ‘Interest rates are coming down slowly, mortgage products are coming back and we must remember that everyone who has taken out a mortgage in the past five years has been stress tested. We have had 10 years of low rates. Long-term rates are going back to 4 to 5% as the new normal.”
With a new Budget imminent, Dominic Agace tells the podcast that he feels there is a lack of political will to take on the big long-term challenges in the market. “There is a shortage in rental supply and concern that landlords have become the whipping boys and shouldering the blame for a lack of social housing, which was sold off. The major issue is supply and no government has delivered on this in the past 20 years.”
Adam Stackhouse, who heads up development and commercial investment team at Winkworth, told the podcast: “There is no sign of panic, more a pause for breath and a moderation of the market against record periods of growth. Tourism is a key driver to the success of large-scale urban regeneration such as Battersea Power Station and locations near historic monuments. Small to medium size developers are overstretched. With newbuild reservations set to fall off in 2023, developers will struggle to raise equity. There are lots of bargain hunters around and there won’t be enough bargains to go around over the next 18 months. Some people have taken too much risk However, the backbone of the market is strong and stable. The UK remains a very desirable location for international investors.”