The UK housing market is showing tentative green shoots as we head towards spring, according to Kris McLean, Managing Director of The Guild of Property Professionals.
He notes that there has been a welcome fall in mortgage rates, with rates of below 4% for lower loan-to-value mortgages, and this is having an improved impact on the market.
He said: “Typical costs of a two-year deal and five-year fixed-rate mortgage have fallen back to where they were in October 2022, despite the Bank of England Bank Rate rising by 1.75% during this period. There has also been a rise in the number of mortgage products, with over 4,000 different products now available.
“According to Zoopla, the number of days a product is available before it is withdrawn has also increased. It is now at 28 days, which is up from just 15 days in January, the highest level since March 2022.”
Despite the recent fall in mortgage borrowing costs, property prices are softening across many parts of the country, and yet McLean says that many sellers continue to be over-optimistic on price.
He continued: “Looking at property prices, after two years of unsustainable rises, an expected price moderation in 2023 is not a surprise. The latest figures from Nationwide show that national price growth has moderated from 11% in the summer of 2022 to -1.1% in February 2023.
“Across the regions, annual price growth at the end of December remained firmly in positive territory, but the start of 2023 has seen prices start to moderate.”
He added: “Over past two years the property sector experienced a wave of activity, however the market is now stabilising and pausing for breath as stock levels and time taken to secure a sale are gradually returning to pre-pandemic levels. With buyers currently in the driving seat, sellers will have to show greater realism on price to get their sale across the line.”
Looking at the lettings market, price growth in the rental sector is expected to continue in 2023. However, there are tentative indications that competition between renters, which has underpinned the record rental rises, is beginning to relent, in McLean’s view.