When the government instructed estate agents to open their businesses again and incentivised buyers with a Stamp Duty Holiday, the market heated up and prices increased.
This was driven by two factors:
Sellers selling high value properties in big cities and moving out to the smaller towns with money to spend and offering high prices to beat the competition for desireable properties.
And any seller feeling able to offer more as they wouldn’t be paying stamp duty.
Then what happened?
People who might have thought about moving in the next three to five years decided to move in 2020/2021. They wanted to have more open space close by, work from home permanently, be closer to family and be better prepared if something like this ever happened again by having a garden at the very least.
The agents in the places people no longer wanted to be and the agents in places where they did want to be, were very, very busy. Here in Southampton there were not so many huge moves but people did make the move out of flats into small houses with gardens saying they never wanted to be stuck looking at four walls ever again.
Where is the market now?
This has resulted in the front loading of 3-5 years worth of house moves and now there are not so many propeties to buy in the marketplace.
Scarcity of properties usually keeps prices high but alongside scarcity we have a cost of living crisis with inflation causing everyday costs to increase and interest rates rising. Economists did know that printing money during lockdowns would have serious effects on the economy and it has.
In my opinion the market is not rising now, it is settling. There are houses on the market at prices no-one would have dreamed of paying two years ago and they have not sold because the moment has passed.
Higher interest rates mean it will be harder to borrow as it will be even more difficult to pass the affordability and stress tests set by the banks.
A final note of caution
Today I spoke to a buyer who is buying a house through another agent. She offered £320,000 which was the guide price and her lender has valued the property at only £274,000 so will not lend her enough to pay the price she had agreed.
This is a sign. A guide price has to be one that satisifies three parties – the seller as it enables them to move, the buyer because they think it’s reasonable and lastly the lender who will agree to lend at that level.
When the lender won’t take the risk, you shouldn’t either.
Buyer beware and seller, be reasonable.