Annual growth has begun to slow, now running at 9.5%, the first-time house price growth has been in the single figures since October of last year. Speed and Security of Sale is becoming more important for those looking to get the best price for their property.

Many have been predicting a drop in house prices for the last few months but so far, the market has been able to limp on, in part due to the lack of housing supply which has managed to prop up prices. However, it is now looking more and more likely that the market will turn. Zoopla have reported that asking price reductions are at their highest level now since before the Covid19 pandemic and they believe this marks the beginning of a change to a “buyer’s market.”

The estate agent Knight Frank have changed their predictions for 2023 and 2024. Previously they had forecast house price growth of 1% in 2023 and 2% in 2024 but now Tom Bill, of the estate agent, predicts a 10% drop in property prices and expects us to see the change begin within the coming months. If the Bank Rate reaches 6% as is feared, Consultants Capital Economics and Credit Suisse both estimate property prices could fall by between 10% and 15%. The Managing Director of the property investment firm HBB Solutions, Chris Hodgkinson, has stressed for sellers to sell quickly in an interview with The Guardian, where he says, “it won’t be long before their home is commanding considerably less or failing to sell altogether due to an unrealistic asking price expectation.”  

These predictions for a drop in house prices come off of the back of Chancellor Kwasi Kwarteng’s mini budget. It has triggered fears that the interest rate will rise more than what had previously been expected. The changing interest rate makes pricing fixed-rate mortgages difficult for lenders and in response they have been withdrawing their mortgage deals on mass in response.

Lenders may have pulled 40% of the available mortgage offers off the table but the positive news for house buyers is the Stamp Duty reformations. Zoopla’s latest UK House Price Index report for September has revealed that due to the increased threshold, where all homes under £250,000 are now exempt from the tax, 43% of properties are now spared the stamp duty charge.

The stamp duty exemption will undoubtedly be a boon for buyers in this troubled market but for many the money is hardly saved. Zoopla’s report has also revealed that the higher mortgage rates is cutting buying power by up to 28%. Buyers are now finding out that their mortgage deals are going cost them hundreds of pounds extra each month.

For homeowners coming off their fixed rate deals they are facing the real fear of not being able to afford the rise in their rates. Many of them will have to consider bringing their home to market in order to downsize, move in with family, or potentially face homelessness. There are some who are even paying penalties to break their current fixed-rate mortgage contract in order to secure at the rates they are now due to the fears that they are going to rise even further still.

Between April and June this year, 80,150 borrowers were in significant arrears and Andrew Wishart from Capital Economics, predicts that this number will surge to 175,000 by the end of 2024. It won’t be just borrowers facing arrears. Landlords are expected to lose thousands in rent this financial year. The number of tenanted households entering into arrears is reaching its highest level in over a decade due to the cost-of-living crisis. These impending tenant arrears, combined with punishing tax changes, soaring interest rates and costly mandated energy efficiency upgrades are eating into Landlord profits, particularly smaller landlords.

Many Landlords are already looking to the property auction process to secure quick sales. Much of the legal conveyancing is done before an auction and provided to buyers in the form of an auction legal pack. This, combined with buyers paying their fees on an accepted offer, reduces the fall through rate drastically and the contractual timescales can see a property complete within 28 days of a successful sale.