Now that spring has truly sprung, we look forward to leaving behind a turbulent winter period in the property market, and at the key factors driving ‘what’s next’ for the market. The upwards trajectory of property prices since 2020 has been interrupted and has brought a degree of normality to the market.
For some, this perhaps has been harder to accept as property prices are now past their peak.
Although, it is evident that despite the rising cost of living, higher interest rates and some uncertainty, buyer and seller demand remains strong. The reality being, that in a post Covid world, if a home move has been on the cards, it is likely to happen, regardless of market conditions. Perhaps we are all much more comfortable living side by side with the unknown.
The key factors driving the residential property market bring no surprises. Growing families, the need for home office space, and a trend in prioritising a personal wish list has maintained demand, clearly evidenced by a return of gazumping for the very best in class property.
We must not forget that since 2020, the prime residential market has been starved of property, and demand never satisfied. A few hiccups such as rising interest rates will not be enough to stop this pent up demand in its tracks. However, adjustments to pricing and affordability for many has had to be factored in, and then the market can resume some normality.
All in all, the trickiest part of the market has to be properties requiring significant refurbishment work. The upfront costs make these properties less attractive unless marketed with a substantial discount.
The prime London residential property market follows a different set of rules to the wider UK market – London is resilient and used to unexpected, flamboyant change. Many property owners are discretionary sellers, often not needing to sell if prices drop.
All in all, this means, a prolonged period of a shortage of homes could last well in to 2023 and early 2024, meaning property values are likely to hold.
The landlord market is continuing to adapt, and is perhaps most impacted by the recent rising interest rates. Properties once boasting an attractive yield, can quite quickly see this wiped out overnight at the point of re-mortgage.
In some cases, this is leading landlords to leave the rental market altogether, further driving the shortage of rental properties and playing a part in driving rents up on the limited remaining lettings property on the market. We have seen 78% of our landlords increase their rent by at least 10% on renewal of their tenancy.
For most people, buying a property is a much more emotional decision, and finding the right property is key, so it is good to remember that ‘one isn’t buying the market, only an opportunity within it.’
Whatever 2023 is going to spring on us, I think we can rest assured that the markets remain strong and that we can help weather any storm.
Polly Ogden Duffy