Cheadle Property Market Update September 2022

They say a week is a long time in politics! It has also been a crazy week for the housing market! 

Unless you have been living in an underground cave, you cannot fail to have read or heard the hysterical noise from many newspapers, news outlets and so called “property experts” , following the Chancellor Kwasi Kwarteng’s first mini budget, where he gave away numerous tax cuts, including a change to Stamp Duty, which resulted in the threshold for first time buyers increasing from £300,000 to £425,000 and the minimum threshold on all purchases going up from £125,000 to £250,000. It was initially well received by home buyers and some estate agents, however others felt that the government simply hadn’t done enough. 

The Bank of England were clearly unimpressed and with the pound tanking immediately following the mini budget, the Bank threatened that interest rates would rise “significantly” – this a day after the rate had already gone up! This in turn caused immediate jitters in the market and lenders pulling hundreds of mortgage products overnight. The doom mongers were out in force, with various predictions of a house market crash, varying from 5% to 50% over the next year. There was also a claim on BBC Question Time that lenders were now offering mortgage deals at 10%. So, what is the reality? We try to make some sense of the madness. 

Lets look at mortgages first, because the effect on many buyers, especially first time buyers and what they can afford to borrow and therefore pay for a property.

A quick search on the price comparison website Moneysupermarket, shows the highest prime lending rate to be 7.44%. The average two-year fixed rate has jumped from 4.74% before the mini budget to more than 5% in the space of a week, with it seeming inevitable that there will be further rises to come.

A look back to December 2021 shows there were around 5200 mortgage deals available. Today there are around 2200.

We feel it is inevitable that there will be some cooling off in the market, whilst buyers and sellers take stock, and many will want to wait and see what the landscape looks like when the dust settles. It is, however, important not to overreact and take a considered and balanced view of the situation. 

There have been some buyers pulling out of transactions around the country, although here in Cheadle, we have not experienced that yet. However, as we will see shortly when we analyse the local data in detail, there are less buyers looking and many sellers have started to reduce their prices in the hope of attracting the buyers who are still in the market. There is also the potential problem of more “forced sales” which could flood the market and give buyers more choice and the opportunity to negotiate a more favourable deal. 

There was some temporary relief for sellers on Friday when the Nationwide published their latest data for September as house price growth remained unchanged. Year on year house price growth eased to 9.5% and the first single digit growth since October 2021 and the lowest since April 2021. It is important to remember though that what is happening now will really on reflect in national data over the next 3-6 months. The stats are always playing catch up. 

Nationwide chief economist, Robert Gardener said “There have been signs of a slowdown in the market over the past month. The number of mortgage approvals remains below pre pandemic levels and there has been a decline in buyer enquiries. Nevertheless, the slowdown to date has been modest and combined with the shortage of stock on the market has meant house price growth has remained firm”

However, headwinds are growing stronger suggesting the market will slow further in the months ahead. High inflation is exerting significant pressure on household budgets with consumer confidence declining to all time lows” 

So, after looking at the national picture, let’s look what is happening in the SK8 and SK3 market. 

New listings are on the increase! 

In our first image, you can see the number of new instructions was up from 159 in August to 171 in September. Compared with September 2021, that’s a 7% increase on the previous year. It will be interesting to see if more properties come to the market over the next few months. There was a significant increase in the number of detached homes up 43% year on year. There were also more semi-detached homes, however a drop in the number of terraces, flats and bungalows. 

Buyers losing interest?

Perhaps the biggest indication of buyer’s mindsets comes in the average number of daily property views on Rightmove, which has dropped massively, down to 123 from 178 last September – a drop of 31%. Whilst the stock levels have risen from an average of 413 last year to 500 in 2022 – an increase of 21%. More stock, but less buyer interest could start to put downward pressure on property prices. 

Property Prices by Type

The rate of house price inflation has been slowly reducing for a number of months now with the average detached house in the Cheadle area up 4.2% year on year and standing at £492,000. Semi detached houses still stand at a healthy 7.8% year on year and now equate to £347,300. Terraces and flats have both dropped in value 4.2% and 12.9% respectively and terraces now average £263,700 and flats £167,400. These figures have altered quite considerably over the last six months or so. 

Sales down especially terraces, flats and bungalows

Last of all, the number of sales in September has dropped from 156 in 2021 to 123 in 2022, which is a drop of 21%. Breaking down the data, the number of semi-detached homes has increased 5%, but detached homes are down 13%. The most significant drops are in the number of terraces down 31% and flats and bungalows down a massive 56%. October will show us better if this is a blip or a trend! 

Summary

There is so much going on now, it is extremely difficult to make a lot of sense of it all. It is undoubtably a very worrying time for buyers and sellers. The threat of increasing interest rates, less choice of mortgages and property values dropping, plus the cost of gas and electric going up again, is going to cause significant pressure on people’s finances and when people are uncertain, they often do nothing. 

We could also see more people forced to sell, which will make it much more of a buyer’s market than it has been for some time and tempt the brave to take a punt! The full impact of everything that is happening economically may not kick in until the end of the year and into Q1 of 2023. What is certain for anyone thinking of selling – it is essential to price your home realistically. Do that and you can still sell. Try to inflate the price and you may find your home sitting on the market for some time. 

If you would like to know how to achieve the best price for your home, please call Maurice, Joe or Patrick on 0161 428 3663, e-mail sales@mkiea.co.uk or why not pop into our buys office on Cheadle High Street for an informal chat. Alternatively, you can book online following the link below Book a FREE Market Appraisal