As we end quarter 2 of 2023 and reach halfway through the financial year, I thought it would be a good time to review the housing market over the first half of the year and look at the remainder of 2023/2024.

It is no secret that people are continuing to feel the pinch with the cost-of-living crisis continuing to rumble on and 14 successive interest rate rises taking their toll on everybody’s pocket. But on Thursday, for the first time since December 2021, the Bank of England decided not to increase interest rates. This followed news that inflation fell to 6.7% and Core inflation dropped to 6.2% from previous highs of more than 11% and nearly 10% respectively.

The million-dollar question is does this mean we are over the worst of things? On the face of it, this is all positive news and could be the turning point, but on the other hand, oil prices have recently increased and the pound has fallen against the dollar which doesn’t make the outlook moving forward quite so positive. That said the housing market for the most part stayed surprisingly resilient during the first half of 2023; with both prices only looking like they had reduced slightly and transaction volumes trading at a rate slightly under that of the 2017-2019 average (2020, 2021, 2022 were very strange years and therefore they are hard to cast comparisons).

Going into the second half of the 2023/2024 financial year, it feels that the Autumn bounce which occurs annually as people return from holiday and the kids go back to school hasn’t really bounced and the interest rate squeeze continues to squeeze people more and more as increasing numbers of people come off low-rate fixed mortgages, with especially the “covid buyers” looking at higher interest mortgage rates. This is driving prices down and transaction numbers are beginning to reduce. As transaction numbers reduce people who must sell because of the three D’s (death, divorce or debt) have no choice but to reduce their property prices further.

Speaking with other people in the industry the issue we have at the moment is the inability to build chains of transactions, as there are hardly any first-time buyers out there. First-time buyers are the people who are really struggling and stuck between a rock and hard place, as they must decide between large rental costs as rents continue to increase or large mortgage payments if they have the deposit to buy. (A first-time buyer buying at £200,000 with a 10% deposit has a mortgage repayment of over £1,000 for 30 years or £1,100 over 25 years). That said there are murmurings that mortgage rates will start to decrease shortly which is positive for thousands of people.

The housing market means different things to different people. For example, the homeowner cares about property price because that is what they have paid all their life into, but in practice, this is only important once you have found your forever home. If you plan on buying upmarket, the fact house prices are reducing can be seen as a positive and people in the industry care about transaction numbers as that is what their business relies on. Both are down currently, and I think the market will be tough through Winter 2023 and Spring 2024. That said with an election looming and positive signs with regards to both interest rates and inflation, I think some people will definitely argue they are now starting to see the light at the end of the tunnel.

If you are looking to sell or buy and want to speak to a property expert about what is right for you, please contact Attwells Solicitors on 01473 229 200.