BREAKING PROPERTY NEWS – 30/11/2022
Daily bite-sized proptech and property news in partnership with Proptech-X.
Decision to not offer households a discount on bills a “missed opportunity”
“It’s a pity that the opportunity for householders to make savings has been abandoned. It would have sent a positive message.”
PRESS RELEASE: The decision not to offer households a discount on their bills is a “missed opportunity” a leading property association has said.
The National Grid had been expected to activate an emergency scheme offering households discounts on their bills if they used less energy.
In the event, the announcement was postponed, with the Grid more hopeful of being able to avoid power cuts, though it is not clear how long this will last.
The National Association of Property Buyers said it was a “pity” the scheme hadn’t been rolled out and warned the country couldn’t remain living on a knife-edge when it comes to power.
Spokesman Jonathan Rolande said: “It’s a pity that the opportunity for householders to make savings has been abandoned. It would have sent a positive message so this feels like something of a missed opportunity.
“The Government is rightly going to be hugely concerned about the idea of blackouts over the Winter because this could prove the final straw with voters.
“However we need to develop a strategy which ensures we aren’t all living on a knife-edge between now and the Spring.”
Offering advice on how Brits can still make savings Mr Rolande added: “ I’d urge everyone to check if their current meter has two supply phases (a day and night rate, sometimes referred to as Rate 1 and Rate 2). This can be found by checking the meter and scrolling through to readings, or by checking a bill. Night rates are already up to 50% cheaper if you have this type of meter. If you do not have one, simple steps such as ensuring large appliances like dishwashers are full before switching them on and using the Eco mode will dramatically cut back on wasted energy.”
It was announced on Monday morning that the Demand Flexibility Service (DFS), which is designed to avoid blackouts, may have been brought in for the first time to reduce expected strain on the electricity grid.
The scheme sees households, which are signed up for the initiative, paid to not use things like electric ovens, dishwashers and tumble dryers between certain hours.
It is the first line of defence in the event that peak evening demand exceeds supply over the coming winter.
The UK’s power grid usually relies on imports from France over the winter months to make up any shortfalls in electricity output.
However, the French nuclear power industry, which accounts for around 75% of its usual electricity generation, is in turmoil.
More than half of the reactors run by state energy firm EDF have been closed due to maintenance and technical problems.
It is exacerbating the wider energy crisis across Europe as countries face down the colder months.
ZOOPLA: A quarter of homes for sale see asking prices reduced with transactions set to fall to 1 million in 2023
- Current UK house price growth is 7.8% – the slowest since November 2021
- 1 in 10 homes have had a price reduction of 5%+ since September 2022
- Almost 1 in 3 homes in the South East and East of England (outside of London) have seen reducing asking prices to attract more demand
- Demand since the mini budget is -44% with sales -28% from a year ago
- Mortgage rates expected to start 2023 at 5%
PRESS RELEASE: The UK’s current house price inflation has slowed to 7.8%, the slowest rate of growth recorded since November 2021 following October’s mini budget which then saw the property market stall.
The housing market is transitioning from an unsustainably strong market to one more balanced, albeit with affordability challenges for homebuyers most reliant on mortgage finance and a weaker economic outlook for 2023. Buyer demand is -44% YoY with a slower decline seen in sales at -28%, which are now back to pre-pandemic levels.
Hottest markets have seen biggest drop in sales volumes
Property sales are still being agreed by those who still have low rate mortgage offers and amongst certain buyers including would-be first-time buyers facing steep rent rises or buyers less reliant on mortgages.
New sales have fallen by up to 50% in the previous market hotspots and high-value areas where higher mortgage rates will hit buying power hardest such as the mid to upper price bands in Southern England (excluding London), East Midlands and Wales. Sales have fallen less in more affordable areas and London where market conditions have been weaker.
More homes are coming to the market for sale with the total stock of homes available up 40% vs 2021 – but still almost 20% below pre-pandemic levels and rising supply will boost choice for consumers.
House price inflation is losing momentum fast. The headline, annual rate of UK growth, at 7.8%, is the lowest since February 2020.
Looking at more recent trends over the last quarter growth rates are running at less than a third of the last year. However, Zoopla’s data is yet to record price falls over the last 3 months across UK countries, regions or major UK cities. We expect price growth to dip into negative territory in H1 2023 as the market adjusts to weaker buying power and concerns over the economic outlook..
Discounts to asking prices set to widen further
Sellers are now having to accept discounts to asking prices in order to achieve a sale – a trend that has become more apparent in recent weeks. The average price achieved in recent weeks has been 3% below asking price when for much of 2021 and the first half of 2022 it has been 0%. We expect discounts to widen further in 2023. History shows that when discounts reach 5-6% this points to flat to falling prices. It’s important sellers who want to achieve a sale are realistic on selling prices and speak to agents for the right advice for their home.
There is a widespread repricing of housing underway
Falling demand and sales means new and current sellers are being forced to set asking prices at more realistic levels to help secure buyer interest. 1 in 10 homes (11%) have recorded a price reduction of 5%+ (although this remains below 2018 levels) and 1 in 4 (25%) have experienced a price reduction of any size since 1 September 2022.
Asking price reductions are greatest in Southern England, where sales volumes have fallen the most with almost 1 in 3 homes in the South East and East of England reducing asking prices to attract more demand.
Mortgage rates to start 2023 close to 5%
The outlook for mortgage rates is the most important factor for home buyers and those planning to move in 2023. The underlying cost of 5-year fixed-rate mortgages has fallen back over the last month and signals mortgage rates closer to 5% as we start 2023. Whilst this is a better position than rates of 6.25% previously seen, it still represents hundreds of pounds a month in average buying costs for the 7 in 10 households reliant on mortgages.
Looking ahead, we expect sales volumes to drop back to 1 million over 2023 (from 1.3m in 2022) with house price falls of up to 5%, concentrated in the high-value markets most sensitive to higher borrowing costs
Richard Donnell, Executive Director at Zoopla says, “The housing market is adjusting to a reset in the level of mortgage rates but the likelihood of double-digit house price falls at a UK level remains low.
While the outlook for house prices is weak, we see a shift to more needs-driven motivations to move in 2023 and beyond which will support sales volumes. Ongoing pandemic impacts, increased labour market flexibility plus more retirement will continue to encourage moves. Cost of living pressures will compound these trends encouraging homeowners to consider their next move. The rapid growth in rents, which shows little signs of slowing, will add to cost of living pressures and add continued impetus to first-time buyer demand.
Sharing advice for sellers looking to list their home for sale, Polly Ogden Duffy, Managing Director at John D Wood & Co. comments: “Tidy up, freshen up, and clean up! Presentation is everything when it comes to selling a home in a competitive market. As well as setting realistic expectations on the price you will achieve. If your property comes with a compromise, such as having a small garden, it’s on a busy road, or it requires a replacement kitchen or bathroom – you need to price accordingly. Competing with other properties at the same price point that come without these drawbacks, will only mean that yours will be last to sell. A combination of waiting too long to adjust your price, and more property coming to the market in the New Year will only provide even more choice for buyers.”
Andrew Stanton Executive Editor – moving property and proptech forward. PropTech-X
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