Property sales falling through due to broken chains and funding issues for buyers means that the property market is seeing a downturn in supply and demand of properties.
According to Estate Agents up and down the country, homebuyer enquiries fell in August and September – the steepest since the pandemic. This makes it the fourth consecutive reading, with 39% reporting a fall.
Now with the winter drawing in and Christmas approaching, and the recession that the government had warned us all about drawing in – supply and demand have dipped again.
Sales of homes are starting to collapse, so much so sellers are now swerving buyers in a chain altogether – even if it means they get less money.
That house price slump may already be underway: figures show that prices fell by 0.9 per cent in October in the aftermath of the mini-Budget. It marks the first time average house prices have fallen for 15 months – and is the largest decline since June 2020, at the height of the pandemic, Nationwide said.
Estate Agency stock has hit a new low, RICS surveyors report falling instructions to agencies and a drop in demand for houses. The RICS indicates that the outlook for property sales is pessimistic.
Although rising mortgage rates are a factor, with some buyers realising they have less money to spend, or discovering that their deal is no longer affordable – there is also a sense in the market that deals need to complete quickly or face them collapsing, either due to a chain break or funding issues from the buyer.
Sales expectations are the most downbeat they have been since the series began in 2012, according to the report. Tarrant Parsons, senior economist for the RICS, said: “Concerns over the economic backdrop and rising interest rates continue to take their toll on market momentum, with strong activity early in the year now giving way to a more subdued picture.
Tarrant Parsons, senior economist for the RICS, said: “Concerns over the economic backdrop and rising interest rates continue to take their toll on market momentum, with strong activity early in the year now giving way to a more subdued picture. “Moreover, given projections for the UK economy point to a potential recession emerging towards the end of 2022, respondents envisage housing sales continuing to slip in the coming months. For the time being at least, the lack of stock available on the market is still providing support to house prices, which continue to rise, even if the pace of growth has cooled over recent months.”
The Guardian has reported that “people selling their homes have typically had to settle for below the asking price in recent weeks, according to Zoopla, which is predicting house prices will fall by about 5% next year.
Since the start of September, one in nine homes have had their original asking price reduced by 5% or more, Zoopla said, and a quarter have had the price cut to some degree, according to the index covering the month of October.”
Over 50,000 sales fell through this yearend as we head into the new year, chances are that things won’t improve anytime soon.
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