Although property transactions have, unsurprisingly, recently seen a decline which is almost certainly in part due to the ‘B-word’, this doesn’t mean the market has nothing to offer those still looking to move.
Affordability has been tracking in reverse to the decline of transactions and with borrowing at record low rates the market is looking more positive than anything happening (or not) in Westminster.
So why is confidence so low?
We have been seeing that in some areas of the country property prices have decreased slightly this year. However, I do not see this as a negative reflection of the market, but more as I mentioned in my previous article, property prices are naturally adjusting.
Which means that buyers, sellers and agents are now all on the same page. Recent Land Registry records show that 96% of homes in England and Wales are selling for more than their asking price. Again, supporting the idea that sellers are now being more realistic about what their home is worth.
Mortgage approvals are at the highest in more than a decade, which does not surprise me and I’m sure it doesn’t for many of you. In July of this year mortgage approvals were 16.4% higher than July 2018 with a total of over 95,000 mortgages being approved, and this figure is the highest it has been since 2009.
Back in August of 2018, the last time interest rates saw an increase, there were ripples of concern throughout the industry about what this may mean for mortgage rates and affordability.
However, the interest rate still sits at a low 0.75%, which means that the cost of borrowing still remains exceptionally low. High levels of competition between lenders combined with low interest rates means that borrowers are in a really strong position.
This mixture of factors is currently making the market an interesting place. Negative press about the market alongside general uncertainty about the future means that those not in the industry are perceiving this to be a tough time for buyers. However, as you can see, this is not the case.
That said, we need to remember that uncertainty breeds uncertainty while confidence breeds confidence. As experts within the industry it is our job to make customers, and the wider public, understand the market and not be drawn into media speculation.
In the coming months the property market, and the UK economy in general, will depend hugely on household confidence.
Economic reports tell us that people are much more confident about their own personal finance, compared to the general economy. My view on this is that if people have been consistently positive about their personal finances over the last decade, when there have of course been uncertain times, then this is likely to continue.
This is good news for the property market where personal finance plays is such an influential factor when it comes to moving home.
Although these conditions will not last forever, I am confident that the Bank of England will not jeopardise economic uncertainty by increasing interest rates at this delicate time. However, it is imperative that we continue to encourage spending and movement within the property market in order to maintain the current conditions.
In my view, property remains one of the best medium to long-term investments and of course provides a home. Our industry needs to be promoting confidence in getting the market moving.
*David Westgate is group chief executive of Andrews Property Group