Cheadle Property Market Update October 2022

What an incredible month October was both politically and economically, with there being two prime ministers and chancellors in a matter of weeks and confusion and uncertainty wreaking havoc across the money markets and impacting massively on interest rates, the cost of people’s mortgages and therefore the property market in general across the country and with interest rates expected to rise again when the Bank of England monetary committee meet again on Thursday 3rd November, the short term outlook doesn’t look great! 

UK house prices fell for the first time in more than a year in October. The average price of a property was down by 0.9% compared with September, to £268,282, according to the latest monthly report from the Nationwide Building Society, the first real market snapshot of such a tumultuous period. This was the first fall since July 2021 and the largest since June 2020. The annual growth rate slowed sharply from 9.5% to 7.2%.

Housing market impacted by turmoil after mini budget

Robert Gardner, the Nationwide chief economist, said: “The market has undoubtedly been impacted by the turmoil after the mini budget, which led to a sharp rise in market interest rates. Higher borrowing costs have added to stretched housing affordability at a time when household finances are already under pressure from high inflation.”

The increase in mortgage rates meant that a first-time buyer (FTB) earning the average wage and looking to buy a typical FTB home with a 20% deposit would experience a rise in their monthly mortgage payment from 34% of take-home pay to 45%, based on an average interest rate of 5.5%. This is like the ratio prevailing before the financial crisis, Gardner said.

Mark Harris, the chief executive of the mortgage broker SPF Private Clients, said the easing of the crisis in the financial markets since Truss resigned had started to feed through to the mortgage market.

“Some fixed-rate mortgage pricing has dropped accordingly over the past few days, with Barclays, HSBC and Santander, among others, reducing their rates,” he said.

Interest rates expected to rise further

However, interest rates are expected to rise further as the Bank of England seeks to bring down soaring UK inflation, which is at a 40-year high of 10.1.% The Bank’s monetary policy committee is expected to raise rates by 0.75 percentage points on Thursday, to 3%.

Such a rate hike could result in mortgage holders on variable rate deals paying hundreds of pounds extra a year in repayments, depending on the size of their loan. Myron Jobson, a senior personal finance analyst at the trading platform Interactive Investor, said: “While anyone on a fixed-term deal is currently protected from rate rises, those approaching the end of their deal are in for a nasty shock when it’s time to remortgage.”

So, what are we seeing in the local market around Cheadle, Gatley, Cheadle Hulme, Heald Green, Edgeley and Cheadle Heath

Well, for those who want or need to sell, the most important thing is to ensure you price your property correctly. There are many agents out there who are still misleading potential sellers by trying to convince them that they can achieve 2021 prices for their homes and that there will be buyers falling over themselves to offer way in excess of the asking price. Let us be clear – those days are gone for now at least. That is not to say you need to give your home away, that is certainly not what we are experiencing in and around Cheadle, but as you will see below in our charts, the number of houses coming onto the market in October 2022, was virtually the same number than came to the market in October 2021 when the market was much stronger. 

New listings remain consistent

Looking at our new listings graphic, the number of detached and semi-detached homes going on the market were up 28% and 16% respectively on the same period last year, whilst the number of terraced houses, flats and bungalows were down, with the number of bungalows for sale down a huge 40% on last October. 

Significant downturn in buyer activity

Perhaps the most stand out set of figures are in our next graphic and perhaps demonstrate how quickly there has been a downturn in market activity following the mayhem caused by the government, especially the Kwasi Kwarteng (remember him!?) mini budget. 

As you can see the average available stock on the market in SK8 and SK3 during October was 508, the highest for almost two year and up 28% on last year, which was 397. The next figures were the most eye watering and cause for concern, which show the average number of daily property views on Rightmove, which this time last year was 175. In the October just gone, it was down to 87! That’s 50% less daily property views than a year ago and down from 123 last month alone! Which is a staggering 29% down in a matter of weeks. 

This data would suggest there has been a huge momentum shift to “lets hold fire and wait and see what happens” amongst many home movers. There is still a lot of noise surrounding the market and lots of so called property market experts, commentators and analyst’s offering their opinions on what is going to happen to house prices in 2023 with most suggesting anything from a modest 3% drop, up to a massive 25/30% drop in extreme cases, so it understandable that many are waiting to see if prices doe come down and what happens to the cost of borrowing before making their decision to move. 

The Nationwide expects the housing market to slow in the coming quarters, in response to high inflation and rising rates. Some economists have warned that house prices could fall sharply next year. The property firm Jones Lang Lasalle said this week that house price crashes were rare in the UK and forecast a 6% drop in prices in 2023.

Still active buyers out there!

Having said all of the above, there are still plenty 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. 

When we look at our next graphic which shows the average house price per type of property, there is a slight anomaly in the stats, as here the average price of a detached home dropped over the last month, although year on year are still up 4.6% , whilst the average price of a semi detached home, terrace and flat all rose and year on year semis are up 10.7% and terraces up 1.1% whilst flats are down 7.7%

Finally, the stats for the number of properties sold, seemed to hold reasonably firm, although this was distorted by a huge spike in the number of detached homes sold, which was up a significant 59% on last year from 17 to 27. On the flip side the number of semi detached homes, terraces, flats and bungalows were all down, ranging from 13% for terraces to 73% for bungalows. Overall sales were down 11.5% on the same month in 2021. It will be very interesting to see how November’s figures look! 

Summary

It is clear, that the Government chaos has significantly impacted on the property market nationally and of course locally. A period of Government stability would help underpin transactions, but we are witnessing a fundamental shift in rates take place after 13 years of ultra-low borrowing costs that will is likely to result in some pricing correction. Low unemployment, tight supply and well capitalised lenders mean we should avoid the kind of double-digit falls seen during the last financial crisis.

But it is clear, that many buyers are adopting an extremely cautious, watching brief, whilst those who are still seeing an opportunity to take advantage of the changing conditions and the larger volume of available stock to choose from, will no doubt be attempting to snare a bargain and unlikely to offer the current level of asking price for most homes. Those who are trying to sell, may need to lower their expectation, as those coming onto the market now, will in the main be positioning their property at a slightly lower asking price to attract those still viewing. 

It is undoubtably much tougher than it has been, but property is still selling, agents are just going to have to work harder than they have in a long time and have a more comprehensive marketing mix, than just relying purely on property portal enquiries, which have halved in a month. 

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.

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