Recently the Royal Institute of Chartered Surveyors (RICS) reported that buyer demand fell for the seventh month in a row in November, however, research from Rightmove has suggested that going into the first half of December may mean that demand is now on the up.
RICS’ Residential Survey for November revealed that activity in the property market is continuing to “weaken across the sales market” with increased interest rates and the recession at fault. They report the trend of decreased buyer demand remains “firmly downward” as the net balance of buyer demand is now -38% however, this is better than it was in October when it was sitting at -53%.
In contrast, Rightmove reports that over the last 2 weeks buyer demand is 4% above what it was in 2019 for the same time period. As a result of Rightmove seeing this, they have now forecast that the property market will resume the level of normality that we experienced before the pandemic throughout 2023 with a slight 2% dip in prices.
The number of homes that are on Rightmove for sale has also increased by 11% in comparison to December 2021. Rightmove considers this to be indicative that there may be lots of potential people who are looking to move but are assessing the market first and deciding what to do.
One reason that the results from Rightmove and RIC’s data are so different could be that RIC’s data is a snapshot of November but Rightmove’s data is from just the later part of November going into December.
RICS also reported that house sales are sitting at a net balance of -35%, however, this figure is not as negative as it was in October, where it sat at -45%.
The number of new instructions within the property market has stayed negative, sitting at -9% net nationally. It has been seen that there has been an increase in the average stock levels that estate agents have – this increased in November from 34 to 35 properties.
RICS also reported that a net balance of -25% of survey participants saw a national drop in house prices over November. This fall in house prices is the lowest record since May 2022.
This reading is also backed up by Rightmove’s report for November which shows that the average price of properties that have come to market has fallen by 2.1% across the month. Likewise, Halifax’s most recent property price index found that over November, house prices fell by -2.3% to £285,579 on average. This is the third fall in a row and the biggest monthly decrease since October 2008.
Although this is a sharp fall, yearly growth stays the same at +4.7% and Kim Kinnaird, Director of Halifax Mortgages commented; “When thinking about the future for house prices, it is important to remember the context of the last few years when we witnessed some of the biggest house price increases the market has ever seen. Property prices are up more than £12,000 compared to this time last year, and well above pre-pandemic levels (+£46,403 vs March 2020).
The market may now be going through a process of normalisation. While some important factors like the limited supply of properties for sale will remain, the trajectory of mortgage rates, the robustness of household finances in the face of the rising cost of living, and how the economy – and more specifically the labour market – performs will be key in determining house prices changes in 2023.”
Chief Economist at RICS Simon Rubinsohn, remarked; “The overall tone of the latest RICS Residential Survey is understandably more downbeat than previously, reflecting the uncertain macro environment and the higher cost of mortgage finance.”
Managing Director of Barrows and Forrester James Forrester also commented on the situation saying “Although property values have dropped momentarily, the market continues to be higher on an annual basis despite the fact that we continue to face ongoing challenges but some of which are purely seasonal.
Many will also quickly flag these drops as a sign that a property market crash is looming, but this amounts to little more than scaremongering.
It’s important that we view recent declines in context, as we are now merely starting to see a return back to pre-pandemic norms. 2023 will; not see a significant fall in house prices, mark my words because stock remains short, new build homes are virtually non-existent in supply, and the long-term mortgage rates are easing as quickly as they recently rose.”