Cheadle Property Market Update November 2022

November has been a strange month! There has been some stability at Westminster – well at least we have had the same prime minister and leader of the Conservative Party for a month, the housing market has been hit by the biggest slump in years as a result of the previous incumbent at Downing Street’s bizarre fiscal policy and we have seen the start of the first ever Winter World Cup in Qatar, which has also been mired in controversy. 

UK house prices saw their biggest monthly fall for more than two years in November as rising interest rates put the brakes on the housing market as many buyers and sellers shelved their moving plans, at least for now.

According to the Nationwide, prices fell 1.4% from October, which was the largest month-on-month fall since June 2020.  Annual house price growth saw a “sharp slowdown”, the building society said, falling to 4.4% from 7.2% in October.

Earlier this month, the government’s official forecaster predicted that house prices will fall by 9% over the next two years as affordability issues weigh on demand. The average property price fell to £263,788 last month from £268,282 in October, the Nationwide said.

The lender, along with many other property market commentators, seem to think that the housing market looks set to “remain subdued” in the coming months.

The Nationwide’s chief economist, Robert Gardner, said: “A lot of this reflects the fallout of the mini-budget and the big rise that we saw in mortgage rates, because that really did change the affordability calculations for prospective buyers and really made things a lot less affordable.”

He added: “If you look at the typical mortgage payment as a share of someone’s take-home pay, for the typical first-time buyer that was running at close to long-run averages of 30%. But as a result of the mini-budget it’s moved up to around 45% of take-home pay, which is clearly a massive difference.”

Mr Gardner said the market was likely to remain under pressure for some time, with inflation – the rate at which prices rise – set to remain high and the Bank of England likely to raise interest rates further, however, one small sliver of comfort might be that that whilst the outlook is still uncertain, there could still be a relatively soft landing for the market, given that employment remains high and the number of properties coming onto the market is pretty low.

Mortgage rates starting to drop

Another bit of potential good news for buyers, is the average rate on a five-year mortgage deal has dropped below 6% for the first time since the disastrous mini-budget two months ago. 

Moneyfacts, a financial data provider, said that the average five-year fixed mortgage rate had dropped below 6% for the first time in seven weeks. The reduction is good news for would-be borrowers,  but rates could “fall further still”, it suggested.

Borrowers may well breathe a sigh of relief to see that fixed mortgage rates are starting to fall, and may now be tempted to scrutinize the latest deals on offer again, if they can find the right property. 

Home loans were already getting dearer after this year’s run of Bank of England Interest Rate Rises, but about 1,700 deals were withdrawn amid the financial shock caused by the mini-budget and the average two- and five-year fixed mortgage rates rose sharply, from 4.74% and 4.75% respectively, to peak at 6.65% and 6.51% on 20 October. The number of deals has increased from a low of 2,258 to 3,540 now. On the eve of the Kwarteng budget there were 3,961 products.

All the signs are there is a shift in the housing market – a predictable shift, but a significant one all the same. Official forecasters say this will be the start of two years of house price falls – but, remember, that follows a period of big rises, so it is important that potential sellers do not get hung up on this. 

Falling property prices may be a relief to some first-time buyers, but the big increase in the general cost of living may limit their ability to save for a deposit. Other buyers may feel that now is the time to negotiate hard on price, and sellers will have to give some extra thought to pricing and how quickly they want to move.

All these are general points, but there is not one single UK housing market to navigate. Instead, there are a series of local markets where price, demand and supply are affected by a host of variables from local schools and housing developments to job opportunities and transport, which is a neat segway for us to move onto our own micro market in SK8 and SK3, covering Cheadle, Cheadle Hulme, Gatley, Heald Green, Edgeley and Cheadle Heath.

For those who want or need to sell, the most important thing is to ensure you price your property correctly. We have adapted a new strategy, that savvy local sellers are buying into and it is already producing results, talk to us about it or watch the video on our face book or You tube channels to find out more. In the meantime, lets look at the local statistics and break them down. 

New listings down in November 

Looking firstly at our new listings graphic, you will sell that the total number of listings in November 2022, were only down 9% on the same time last year from 133 to 121. The number of detached homes listed remained the same, whilst there were double digit drops in the number of semi-detached, terraced homes and flats coming to the market. There was however a 9.5% increase in the number of bungalows for sale. 

Significant downturn in buyer activity

The second graphic paints a slightly more telling picture and follows a very similar pattern to the month of October. 

There were still an average of 508 available properties in November. When you analyse the figures closely, you might wonder with a 9% drop in new stock, how this could be. What is clearly evident is there must have been a significant number of sales which fell through and went back on the market to boost the average available stock figures. 

As referred too earlier in the article, buyer apathy is very obvious and for the second month running Rightmove is reporting only 82 average daily property views on the Portal, compared with an average of 187 this time last year, which is a massive 56% down.

There is now clearly almost a Mexican stand off between those wanting to sell and those  hoping to buy The Great British Property Market Stand Off as sellers hold back from listing their property as they worry it won’t sell or achieve the price they want/need and buyers waiting to see what happens with interest rates and house prices, in the hoping of snaring a bargain. Something will need to give, but what? 

House Prices remain firm but there is a downward trend

As we have stated on previous occasions there are still a significant number of people who fall into the need to move or want to move category. This can be downsizers, upsizers, those moving for births, deaths or divorce or those who are moving for schools or employment reasons, therefore it doesn’t need to be all doom and gloom, certainly not in the Cheadle area. 

Detached homes are still up 4.4% year on year and now stand at an average of £489, 5oo. Semi detached homes are up 10.7% and average out at £354, 500, whilst terraced homes are up a more modest 1.1% standing at £275,000 and Flats are the only category that have dropped in value over the last year -7.7% and now average at £172,400.

Sales down 30%

Finally, lets look at the sales figures for November and these are a little grim. As you will see, overall, the number of sales in the local area dropped 30%. The number of sales of detached homes rose 25% on the same period last year, whilst the most significant drop was in the number of semi-detached homes, which dropped a massive 52%. This is the market we feel is probably most impacted by the current economic climate due to it being mainly families. The number of sales in the terraced and flat markets are also down considerably -33% and 47% respectively and only bungalows remained unchanged. 

Summary

Whilst an element of stability has returned to Downing Street and the financial markets are settling down again after the recent Autumn statement, things clearly remain in recession and we are in for a long hard Winter and 2023 is likely to remain very difficult. 

There will need to a correction in house prices. We can see a drop next year anything from around 5 to 10% and sellers really need to factor this into their asking prices when putting the house on the market. It is important to remember prices became artificially inflated during Covid and even a correction of 10% would still leave prices at above pre pandemic levels. 

There are buyers still out there and plenty who would buy, but with the high cost of borrowing and cost of living crisis, they will only buy at the right price. Many other are still adopting a watching brief and waiting to see which way the market falls and whether there is an increase in supply, a drop in prices or a further drop in interest rates. A lot to ponder! The Great British Property Market Stand Off

It is undoubtably much tougher than it has been, but property is still selling – we have sold three properties this week, all had been on the market for less than a fortnight and all sold for above the asking price, which we positioned attractively to attract a good level of interest. We definitely have a strategy to combat current market conditions! 

If you are undecided on whether now is the right time to sell or you would like to know where you should position your asking price to sell, please contact Joe, Patrick or Maurice and arrange for a FREE market appraisal of your home on 0161 428 3663, e-mail sales@mkiea.co.uk or why not pop into our office on Cheadle High Street for an informal chat. Alternatively, you can book an appointment on line following the link below.

Book a FREE valuation