Guild boss identifies housing market ‘green shoots’

Lower mortgage rates than the end of last year and slowing inflation should sustain the housing market as it enters the traditionally busy spring period, an industry executive claims.

Kris McLean, managing director of The Guild of Property Professionals, has issued a positive message for the sector but said realism is still required among sellers.

He claims that despite house price growth slowing, the property market and the UK economy are showing “tentative green shoots” as it heads towards spring.

McLean highlights that there has been a welcome fall in mortgage rates, with rates of below 4% for lower loan-to-value mortgages. 

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 more than 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 According to Zoopla, the number of days a product is available before it is withdrawn has also increased.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.”

McLean said the housing market and economy are closely interlinked, and claims that despite the rising cost of living, the rate of inflation has slowed and is expected to fall back over the course of the year. 

He added: “Employment levels remain strong, GDP forecasts are improving, and any recession is expected to be less severe than first predicted. 

“Prices are softening but many sellers continue to be over-optimistic on price. With supply returning to more normal levels, up 60% compared to a year ago, there is more choice for prospective purchasers with Zoopla reporting the average discount to asking price is currently 4.5%.
 
“Looking at property prices, after two years of unsustainable rises, an expected price moderation in 2023 is not a surprise. 

While noting recent Bank of England data showing mortgage approvals in January had fallen to their lowest level since May 2020, McLean said there are more recent signs of improvement, adding: “Zoopla report that buyer demand is up 8% on the pre-pandemic years, while the latest survey of UK consumer confidence undertaken by GfK registered a +7 uptick in February. 

“This represents the largest monthly improvement in nearly two years. While there is some way to go still, confidence in the UK’s economic outlook and personal finances over the next 12 months registered a +11 and +9 point month-on-month rise respectively.

“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.”