What’s happening in the housing market? - Blog

What’s happening in the housing market?

What’s happening in the housing market?

Residential GFW 12th October 2022


Does anyone know? The answer is yes. We do. And we’re here to provide some reassurance in these turbulent times where all we seem to be hearing is ‘doom and gloom’ and scaremongering of the highest order.

Here, Victoria Linsley takes you through the headlines we’ve seen lately and the reality of how this will affect us in the North East.

On 23rd September, the government announced alterations to the Stamp Duty Land Tax currently payable by purchasers when the value of the property being bought exceeds a certain level. This measure raised the amount that a purchaser can pay for a residential property before they are liable to pay the Tax (SDLT).

The current residential nil-rate tax threshold doubled from £125,000 to £250,000, and the nil-rate threshold for First Time Buyers Relief was increased from £300,000 to £425,000. This means that individuals purchasing residential property on or after 23rd September 2022 will pay less or no SDLT. For context, two-thirds of homes (66%) are now exempt from stamp duty for first-time buyers in England, and a third of all homes are exempt for all buyers (33%).

This is an exciting change for us in the industry, and a positive impact is expected as lower costs to the homeowner balance out the ongoing cost of living crisis which could just make the difference and prompt someone who needs to move.

We’re certainly viewing this as a positive for the local market with a number of houses in our area priced below the stamp duty threshold.

There is no denying that the rapid increase in the cost of living is a tough readjustment for us all. Recent international political events have led to higher energy bills and increases in the prices of food and other goods.

The Bank of England’s Monetary Policy Committee (MPC) role is to make sure that inflation is low and stable and ultimately aims to reduce inflation. Unfortunately, to balance this in the short term, they do that by increasing the UK ‘base rate’ which influences all the UK’s other rates, including those you might have for a loan, mortgage or savings account. These higher interest rates make it increasingly more expensive to borrow, encouraging people to save, overall, meaning that people will tend to spend less.

The UK’s base rate dropped to an all-time low of 0.1% following the outbreak of the coronavirus pandemic in March 2020. The most recent increase of 0.5% happened on 22nd September of this year and is currently set at 2.25%.

Whilst this rise will have been felt by many, the reality is that this means mortgage borrowing is still broadly affordable to the market and after the initial shock to the market our activity levels within branches remain unaffected to date. Good news for sellers and buyers alike.

An example provided by the Bank of England highlights the reality of the additional cost:

So, on a £130,000 mortgage repaid over 25 years, if the interest rate rises by 0.5% to 4% the monthly repayment rises by just £35.

The Government cap on energy bills is reported to have helped move towards stabilising inflation and only a small amount of further increase is expected. The rate of inflation is currently about 10%. The Bank of England predicts it to rise to about 11% in October, and stay above 10% for a few months, before starting to fall towards the target rate of 2%.

Whilst the future is uncertain, our job is to communicate what is happening on a day-to-day and real-time basis, meaning people can base their decisions around property on the current regional and local position rather than the situation being exacerbated by the media creating a story that makes for a dramatic read.

In terms of the housing market Rightmove describes the current market as “surprisingly resilient despite economic pressures”, which I believe gives a true picture.

Supplying cheap credit has contributed to the inflation of prices. Despite interest rates increasing, they remain relatively low by historical standards. Buyers with a large deposit can still apply for a two-year fixed mortgage, at an initial rate of 2%.

A large portion of our property market is of interest to the ‘second-steppers’ or those even further up the property ladder, often meaning those with a larger deposit and therefore still benefitting from the lower rates. Further evidence that the reported mortgage rates increase will not be damaging to house prices in the locality.

As growing inflation rates call for higher interest rates, the housing market is likely to slow down. However, a slowdown in the market does not mean a fall. For now, house prices are not yet looking to reduce as demand still outweighs supply.

Buyer demand is up 20% on the pre-pandemic five-year average, and the stamp duty cut hopes to stimulate more demand over the next few months.

The reality of the situation is simple. Buyers still want to buy. Buyers needing finance to buy, can still borrow.

Rates are still below the historic average and there is still a distinct lack of available property advertised, thus adding pressure to demand levels and keeping house prices at their level.

Stamp duty changes announced by the government are cushioning the blow to the cost of moving for a large portion of the market.

And above all, we still live in one of the country’s most beautiful and accessible places which people continuously identify as a sought-after location.

At times like these with so much conflicting advice and information it is more important than ever to appoint an agent who gives frank advice about the best next step for you and your property, be it to sell or let or do nothing.

As an agency with over 40 years of business in the region, we’ve succeeded and thrived in the most complicated markets and continued our high levels of service when buyer demand increased ten-fold after the ‘lockdown’. We’ve advised clients at every stage of their property transaction, we’re prepared, and we’re here to guide you and make the move an easy one.

Our current message is that it is still a good time to sell.

Victoria Linsley
Residential Surveyor, Branch Manager
0333 920 2220 Ext 2305 / 07872 501647
Email Victoria




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