How could growing economic challenges affect the Spring market?

Posted on Wednesday, March 23, 2022

With 2022 at full pace and the traditionally busiest period in the year for transactions only a few weeks away, you could be forgiven for thinking that it's plain sailing for the UK property market in the short term. However, interest rate rises and growing pressure on consumers’ back pockets could paint a different picture.

Members of The Guild of Property Professionals share what they foresee happening to property prices in Spring and beyond.

Jim Stillwell, branch director at Keats Estate Agents in Haslemere, says: “We expect property prices to remain high in Haslemere due to the severe lack of stock and high demand from buyers searching for a home in the area. The supply of properties coming to market is low and properties that are marketed with us are selling quickly, however, the Spring market is likely to bring more activity. We predict that competition amongst buyers will remain high throughout the year. Many are often prepared to pay in excess of the asking price to secure their ideal property.”

Matthew Arthan, sales director at Barbers Estate Agents in Shropshire, agrees: “Whilst there is still a general shortage of stock, my view is that property prices will continue to rise until either stock numbers increase to more normal levels or macro-economic factors worsen considerably more.”

Dan Henry from Bensons says that stock constraints are still an issue in Northern Ireland: “Demand continues to outstrip the supply of property, and typically highly sought-after properties attract strong enquiries resulting in guide prices being exceeded. New builds continue to show strong growth with new releases typically being over-subscribed and booked within hours of being released.

"Traditionally the spring represents the most popular time to list your property for sale and it is anticipated the level of supply within the marketplace will increase. Despite the global challenges, we remain confident that the local property market continues to recover post-Covid, and high levels of confidence continue to prevail within the marketplace.”

Richard Stovold, owner of Seymours Guildford and Burpham offices adds: “Our view is while there is a strong interest from buyers to secure homes close to highly regarded schools with outstanding countryside pursuits on their doorstep, prices will continue to rise. Perhaps not at the pace of 2021, which was fuelled by the stamp duty holiday, but a more realistic upward trend. It is all about supply and demand which at the current time is in favour of a seller, with multiple buyers chasing each property place on the market.”

Tony Williams, head of Sales at Whites Estate Agents in Salisbury, says: “At the moment buyers so outweigh sellers that I cannot see any reason, even with rising general costs, Ukraine, and rising interest rates, that we will slow down. Currently, we are listing correctly priced properties, which will sell within a week with multiple viewers and mostly multiple offers. We never list anything now without the term ‘guide price’.

"Fundamentally we have way too many people living in the UK for too few properties. We have buyers pouring out of the cities to ‘buy twice the house at half the price’ who can work from home and the older generation who are moving to be near children, all of whom bring good money with them and don’t haggle over the asking prices. Property prices will therefore continue to rise this year and I suspect by around another 10%.”

Alex Walton, sales manager at Bradford and Howley, believes that prices will continue to increase but not at the rate of knots of 2021: “There is still an imbalance of buyers to sellers at the moment. Stock is coming on and it’s selling very fast, so I think that stock levels will stay the same."

James Millard of James Millard Estate Agents in Kent, says this about stock levels: “Based on the expected scale of interest rate increase, I would not expect stock levels to rise. However, and more importantly, if we see an end to the war in Ukraine, a continued economic recovery after Covid and renewed impetus in strengthening the UK economic position globally, post-Brexit, people will gain confidence and there would be a whole new surge in activity.”

Simon Davies, branch manager at Norman F Brown in Bedale, says: “Stock levels are not increasing at present, and we can't see what will change that in the short to medium term. However, we anticipate demand will drop as the year goes on due to high inflation leading to more interest rate rises, causing mortgages to become more expensive as the year goes on. This may lead to some buyers being priced out of buying and demand will then drop which will impact the rate of house price growth.

"With this in mind, if buyers are seriously in the market they should buy sooner, if possible, rather than later, to take advantage of lower interest rates making their mortgages cheaper and more affordable.”

Melfyn Williams of Williams & Goodwin and All Wales Auction believes that 2022 could be the year of stability and return to normality in the housing market.

Melfyn adds: “With rising inflation having to be controlled and in turn, expected interest rate rises, we expect a cooling of rapid house price growth in the medium term, which will be good for the housing market. Most ‘booms’ and significant house price growth last about 18 months - any longer periods of sustained rapid growth usually end in misery; therefore, a cooling now is to be expected and notwithstanding outside issues affecting the market - should provide a return to normality rather than a crash.”

While most agents experiencing constrained levels of stock, some are seeing an increased number of listings coming market. According to Richard Harrison, Director of Bentons in Leicestershire, his office has seen an increase of around 20% month-on-month so far this year.

Angi Cooney, director of C Residential in Staffordshire, says: “We know that our stock levels are increasing with more people coming onto the market. This cannot be said for all agents in our area.”

Residential Sales Manager of Millbank Estate Agents, Donna Vincent, says that she is seeing stock levels slowly increasing since the beginning of the year, although they are still at an all-time low.

Roger Wilkinson of Wilkinson Grant & Co in Exeter, concludes: “As the green shoots of Spring begin to show through and Covid begins to loosen its grip, stock levels are already on the increase as a new wave of home movers enter the market. Judging by the vast numbers of market appraisals we have carried out in recent months; we predict a return to a ‘more normal’ market in quarter two and with it a slowdown in house price growth.”

Via @PropertyReporter