Strongest growth in property since late 2022
House prices edged up 0.3% in August. Annual growth rising to 4.3%. This is the fastest pace since late 2022. However, this is partly due to the comparison with weaker growth this time last year.
Buyer confidence has been boosted since the Bank of England rate cut at the beginning of August and mortgage rates trending downwards. 37% of property professionals expect sales prices to increase in the next 3 months, with 1.4% house price change now predicted through 2024, up from -2.2% this time last year.
However price growth is likely to remain constrained by affordability, which remains a significant challenge for many potential buyers. Source: Dataloft by PriceHubble (https://inform.dataloft.co.uk/) (poll of subscribers), Halifax, HM Treasury Average of Independent Forecasts.
Home sellers are being rewarded for waiting out the market after Halifax data shows house price growth has approached a two-year high, it has been claimed.
The latest Halifax House Price Index shows annual growth hit 4.3% in August, the highest rate since November 2022.
Prices climbed 0.3% on a monthly basis, compared with 0.9% in July, putting average prices at £292,505.
The figures coincide with the interest rate cut in August. But the data may reflect mortgage applications with Halifax from months beforehand. However..
Jukes Estate Agents issue a warning:
Co owner Geoff Flewers issues a warning to sellers: He said: “Data and statistics can sometimes be manipulated to show what people want you to believe. However, there does seem to be strong confidence that prices are on the up at last. With this in mind there are a couple of factors sellers and buyers MUST consider”.
- “First time buyers will do doubt want to buy as soon as possible if prices are going to continue to rise”. “Having said this, they have to weigh up buying sooner rather than later as prices rise against falling mortgage rates.”
- “Sellers have a similar dilemma.” However, there are other factors that come into play and that’s upsizing or downsizing.”
This is an interesting observation from Jukes Estate Agents Harlow’s co owner. There is a distinct difference in what a seller should consider depending on their journey on the ‘property ladder’.
A seller on the way up the property ladder should try to sell & buy as soon as possible if prices are rising. When you think about it, it’s quite important. In market conditions where property prices are rising, the differential between their existing property and their onward property will widen as prices rise. For example:
Sellers have a property worth £400,000. They are looking to buy a property worth £550,000. Therefore, the differential is £150,000. Even when property is increasing modestly at what Halifax now say is 4.8%, waiting 6 months has the following effect. The sellers property would now be worth approx. £410,000. The onward purchase would now cost £563,200. That’s a differential of £13,200 which as a rough estimate is £100 per month. On a 25 year mortgage that’s £30,000 extra the seller will pay! There is also an extra £660 in stamp duty!
Sellers downsizing and moving into a cheaper property will see the opposite. The differential between their more expensive property and a cheaper one means they would make £13,200 extra by waiting using the same figures as above.
Conclusion
Sellers and indeed first time buyers have to try and second guess where mortgage rates are going to end up. They will no doubt drop some more but they probably will not drop that much. Property prices on the other hand will continue to grow. Why? Because history shows us that while mortgage rates ebb and flow, they stay within a fairly tight price bandwidth, property always has and always will continue to grow. It may have it’s difficult patches. However, over time it will rise!
Therefore, Sellers going up the ladder probably need to sell sooner rather than later to save money!
First time buyers also need to get buying as soon as possible.
Downsizers on the other hand can perhaps afford to wait a while?