Demand is cooling but sellers' market remains for now - claim

Buyer demand is cooling but the property sector still remains in a sellers’ market for now, new analysis claims.

The latest National Hotspot Index from housing market consultancy TheAdvisory has analysed the number of sold subject to contract and under offer properties as a percentage of total stock for sale in the third quarter of this year to determine where there is a buyer or seller’s market.

It then gives each location a PropCast - that can be searched online by users - designating a sellers’ or buyers’ market as:
•    0°-25° = very cold / extreme buyers’ market
•    26°-34° = cold / buyers’ market
•    35°-49° = hot / sellers’ market
•    50°-100° = very hot / extreme sellers’ market

All regions outside of London saw a fall in demand during the third quarter, according to the research, with East Midlands leading the way as its market heat temperature dropped from 65° to 57°.

London saw a rise of 11.6%, heating up from 43° to 48°. 

However, all regions are still in a sellers’ market due to their temperatures being over 34°.

At a county level, all counties saw buyer demand fall with West Glamorgan the least popular with a 15.4% decline.

The majority or 94% of cities recorded a fall in buyer demand, with Cambridge leading the way where it dropped 30%.

Just three cities saw a rise, with Chelmsford leading at 47.5%

Gavin Brazg, founder of PropCast and TheAdvisory, said: “We kick start Autumn reporting a substantial difference in buyer demand over the last three months, seeing many falls. 

“This is undoubtedly due to rising energy bills, interest rates and mortgages, which has had a huge impact on the UK's property market. 

“When the mini-Budget' announced Stamp Duty would be cut permanently for particular price thresholds, it offered a glimmer of hope to help boost the market, especially for first time buyers. 

“However, with mortgage lenders removing deals soon after and rates passing 6% for the first time since 2008, a certain amount of panic has started to kick in.”

Brazg said he doesn’t believe the market is set for a crash due to robust employment data and the number of homeowners on fixed rate mortgages.

He added: “But the UK property market is in for a rough ride over the next couple of years as many first-time buyers, who are the beating heartbeat of the UK property market, simply won’t be able to afford as much house for their money due to now significantly higher mortgage payments.

“This means first time buyer housing stock will have to come down in price and this will have a knock on effect throughout the rest of the property market.

“Although a lot of the UK is still in a sellers' market, we are seeing big drops in demand, pushing those locations further towards a buyers' market.”

He said more properties are also coming to market, which will mean house prices will stabilise and potentially even fall. 

Brazg said: “This means it's more important than ever before for sellers to remain realistic about what their home is worth, and choose a good local estate agent who will implement an optimal pricing and marketing strategy. Otherwise, they will find their home will struggle to sell.

“For buyers, this means they may be able to negotiate on price a bit more - something that hasn't really been possible over the last two and half years. 

“This can help ease the burden of increased mortgage repayments, as can any stamp duty saving. However, demand is still out there, so buyers need to make sure they are ready to move when they're making their offer. This means having the funds organised, solicitors appointed and all the paperwork in place.”