This week revolved around a single story: the latest update on house prices. According to the Nationwide report, prices have experienced their most significant decline in 14 years, with a 3.4% drop in the year leading up to May.
That’s the headline, but upon closer examination, we find that prices only dipped by 0.1% in May itself. Therefore, the majority of the impact has already occurred and been reported. While this doesn’t imply that the market is completely out of danger or that things couldn’t worsen, it’s worth noting that prices are merely 4% below the peak reached in the summer of ’22. In the grand scheme of things, this isn’t as dire as it may seem. Additionally, I firmly believe that we can anticipate better news in the coming months as sales figures for the spring market are released.
From what I’ve gathered, the market performed notably well for both home sellers and estate agents. However, we must consider the possibility that things could take a turn for the worse. In the property industry, it’s wise to heed the old saying, “hope for the best, plan for the worst.” Several factors could potentially undermine even a relatively robust property market.
Interest rates are already high and may continue to rise further. Most economic commentators predict another increase when the Bank of England convenes, followed by another rise after that. As landlords exit the market, property supply will increase. There are concerns that the market is heavily reliant on cheap borrowing, and once that support diminishes, the market could experience a downturn.
While no one can predict the future with certainty, it’s always prudent for businesses to evaluate their operations, cut unnecessary costs, and increase fee-earning activities. It’s good housekeeping and often overlooked when the phone keeps ringing and selling prices consistently reach new records.
Adaptability is key for competent agents in the changing sales environment. Those who resist change in the hope of returning to normalcy will likely be disappointed. The boom we’ve witnessed over the past three years is far from the norm. This market is what it is, and we must swiftly acclimate ourselves to it.
Another noteworthy story this week was an independent survey of 1,323 UK homeowners, revealing that only 21% feel the government is taking sufficient action to address the housing crisis, while a significant majority of 69% consider the lack of affordable housing to be one of the most pressing social issues in the country.
This left me with one lingering question: Who are the 21% that believe enough is being done? Challenges are evident wherever we look – interest rate hikes, the cladding scandal, unpopular rent reforms, a generation facing the prospect of never owning a home, skyrocketing rents, falling prices, indecision on leasehold reform, missed and abandoned housing targets. Regardless of one’s political inclination, it’s hard to identify any policy that has successfully tackled the imbalances within this unfair property sector.