Unveiling the Shifting Property Market: June Market Update

We thought we’d clear up some confusion. The news headlines are all over the place and perhaps more surprisingly, so are the house price indexes which many look to as a source of truth.

So, what is going on? There are two sides to this story with a balancing act being struck by buyers and sellers. But have we reached a tipping point, with mortgage rates on the rise and house prices confusing both sides of the market, this balance may struggle to sustain.

Manning Stainton

May's Market Performance

Let's start by exploring the performance of the market in May. It was a month characterised by strong activity levels and a remarkable surge in sales agreements. New property listings were in abundance, presenting buyers with a wider selection to choose from. However, what truly stood out was the significant increase in sales agreed, surpassing the levels seen in previous years.

Changing Buyer Behaviour

One fascinating aspect of the current market is the evolving behaviour of buyers. With a greater choice of properties available, buyers are approaching the market with a newfound perspective. The number of properties for sale has doubled compared to the previous year. It's worth noting that the overall stock level remains like that of 2018 or 2019, reflecting a return to a more balanced market.

Price Fluctuations

Now, let's talk about prices. Various indices have provided interesting insights into the price dynamics. The Halifax index reported a 1% annual decline, while Rightmove's Asking Price Index indicated a 1.8% increase in May. Our analysis suggests that prices have receded by approximately 3 to 4% since the latter part of last year, making it a potential opportunity for buyers. These adjustments are considered a necessary correction, given the substantial growth experienced during the pandemic.

The Tipping Point

We've reached a crucial tipping point in the market. Sellers are still eager to push prices higher, despite the growing number of property options available. On the other hand, buyers are facing rising finance costs, with interest rates and fixed-rate mortgage expenses on the rise. As a result, some buyers may choose to adopt a cautious approach, waiting to see how the market unfolds.

Impending Mortgage Expirations

Adding to the complexity of the market, there's a cloud of uncertainty looming ahead. Around 2 million homeowners will witness their fixed-rate mortgages expire within the next 18 months. This impending wave of mortgage expirations further contributes to the delicate balance between supply and demand.

Looking Ahead

As we move forward, it's crucial to stay informed and adapt to the changing dynamics of the real estate market. A further increase in interest rates beyond 5% could potentially tip the scales, leading to an influx of properties hitting the market and granting buyers even more control and choices. Consequently, this might exert downward pressure on prices, creating new opportunities for buyers.

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