20 December 2022 – New data suggests that buyers are confident that they will purchase a property, but seller confidence has fallen.
According to the newest Property Sentiment Index by property portal OnTheMarket, attitudes from buyers and sellers are very different.
While 74% of buyers in November were confident they will buy a property within the next three months, only 63% of sellers in November felt the same about selling their house within the next three months, down from 82% in October.
The contrasting views of sellers and buyers signals a shift in the market away from a sellers market, which we have had for a while now.
Sellers Still Confident In Medium-Term
Although the property portal says that this does not mean that confidence in selling as such has fallen, sellers are just less confident of selling their property fast.
This suggestion seems to be supported by the data, as 27% of sellers believe they will sell their home within six months, which is up from 13% in October. This shows that the confidence in the housing market remains strong.
The blow that the housing market has received from the fallout of the mini-budget has caused uncertainty, which is reflected in the data.
With the fallout from the mini-budget, combined with seasonal factors, it’s unsurprising that consumers feel less confident in the short term.Jason Tebb, CEO of OnTheMarket
While houses don’t sell as quickly as they did a few months ago, still 42% of properties listed in November were sold subject to contract (SSTC) within 30 days.
Even though this is down from 53% in the previous year, stock levels have recovered since, so there are more properties to choose from now for buyers. The property portal argues that this signals a rebalancing of the market rather than a sever correction.
OnTheMarket suggests further that despite the uncertainty regarding mortgage rates and rising interest rates, serious buyers will not be put off from buying a new home.
Number Of Property Transactions Still High
According to the Conveyancing Market Tracker (CMT) from the property data and technology provider Search Acumen, we have seen a record high number of property transactions in Q3 2022, not taking into account Q1 2022, which included a big backlog from lockdown sales.
As a result of the increase in transactions, the average quarterly caseload of a conveyancing firm has increased from 70 in Q3 2021 to 80 in Q3 2022. Despite a marginal increase in the number of active conveyancing firms, the data suggests that the workload for solicitors has gone up.
This will cause delays for buyers and sellers who are keen to push through the completion of the sale as soon as possible.
We know from this data that the size of the conveyancing sector has not kept pace with transactional growth, which inevitably means frustrating delays for consumers and stakeholders alike, especially when you consider the digital switch happening at Land Registry which comes with its own teething issues.Andy Sommerville, Director at Search Acumen
One big concern is mortgage fall-throughs, which are caused by rising mortgage rates as buyers are trying to get the cheapest rates.
Another concern for solicitors is the announcement in the Autumn Statement confirming that public spending will be cut. Given that there are already delays in processing property transactions, a budget cut will only make the problem worse, meaning sales will take even longer to complete.
This could cause huge problems for buyers, as their mortgage offer expires and the new offer might not be affordable any more. This could lead to an attempt to renegotiate the sales price, causing even longer delays.
Interest Rates Still Rising
Affordability could become more of a problem, with the Bank of England continuing to raise interest rates. This month the Bank raised the base rate from 3% to 3.5% in an attempt to curb inflation.
This means that homeowners with tracker mortgages will have seen their monthly payments go up on average by £50.
Over 1.6 million people in the UK are either on tracker or standard variable rate mortgages and are affected by interest rate rises. According to figures by UK Finance, 9% of people with a mortgage in the UK are on tracker mortgages, while 11% are on expensive standard variable rate mortgages.
While it is difficult to predict, some industry insiders think that with the most recent rate rise we have reached the peak. Others expect the peak at 4.5%, so more rate rises might be on the cards in 2023.
What is encouraging is that the pace at which the Bank raised the base rate has slowed. From 0.75% last time round to 0.5% this time.
It remains to be seen if buyers remain confident in the face of affordability becoming more of a challenge.