The amount of new homebuyers in the market seems to be falling rapidly, according to research carried out by The Royal Institute Of Chartered Surveyors. Is this something to be concerned about or just a blip as people feel the crunch of the cost of living?
It seems that today, everything is going up. Life is expensive, that’s clear to see. Petrol is now almost £2 a litre. Energy bills were set to go up to ungodly amounts before the new prime minister announced her plan to cap bills at £2,500 a year. The extortionate price of food and drink is forcing people to resort to using food banks and sadly necessary rent rises are pricing loyal tenants out of their homes. If people are finding it hard to afford essentials like the above, its expected that the amount of people looking to purchase a home has gone down. People who can still afford to buy a property may also be avoiding purchasing for the time being, as they wait to see how things play out in the UK economy.
The RICS have released some data from a recent study of the market that they have carried out and they have dramatically announced that homebuyer demand fell in August 2022 at a rate not seen since the start of the COVID-19 pandemic. RICS have also attributed this drop to the cost of living crisis and also the rapid rise in interest rates that we have seen in recent months. They have said that their first identification of the decrease in home buyer transactions happened when they observed the amount of survey instructions decreasing over the last three months. RICS say ‘this is the fourth consecutive month of negative readings for new buyer enquiries, with figures falling more sharply in August.’
Their report shows that a net balance reading of -22% was posted in August for ‘Agreed Sales’, which shows a large slump in home buyer sales compared to the -13% figure recorded by RICS in July 2022. RICS confirmed that sales have now fallen for five consecutive months and looks like it will continue for the foreseeable future.
But, for people who are property owners and do manage to find a buyer, the limited availability of property stock in the market in general continues to stoke the fire of rising house values. The current average property price in the UK is around £275,000 and the average price of a property in London is now over £400K. Their report says that ‘a net balance of +53% of respondents reported an increase in house prices during August. This figure is down compared to their reported figure of +62% in July 2022, it is still way above RICS long term average reporting of +13%. Encouraging figures if you are looking to sell although you may struggle to find a buyer!
Speaking about the new figures released, former chairman of RICS Jeremy Leaf has commented:
“It’s becoming increasingly clear – and not just at the coalface – that the shortage of stock is continuing to support prices but at the same time disguising the impact of the rising cost of living on the rest of the market. Another problem is that demand can disappear if not satisfied fairly quickly so prices may soften further. Nevertheless, we’re not seeing widespread renegotiations or buyer withdrawals so don’t expect a significant correction yet although the market is certainly more price sensitive than a few months ago.”
Louis Mason, Content and communications manager at Oportfolio mortgages in South West London comments:
“RICS are and have always been an essential part of the property sale and purchase industry and as mortgage brokers and mortgage advisors, they are an integral part of our business. With such a high standing in the industry, information collated and produced by RICS is always well received and respected. It is troubling to see that homebuyers are either being priced out by the cost of living or delaying buying until inflation and other monetary worries are resolved. We completely understand people’s reservations. However, we are here to help as financial advisors.
We want everyone to be financially safe and secure and we want people who are in the financial position to buy, to feel confident and comfortable with their purchase. Give our advisors a call today for a free financial health check. For people who are struggling with the cost of living, we are always here too to go through your current mortgage deals and insurances to make sure that you have the most financially sensible policies and loans in place.”
If you or anyone else you know is interested in either purchasing a property or going through a financial health check, give our team a call today to get things started. We are always here to help out.