The latest Homebuyer Hotspots Demand Index by estate agent comparison site, GetAgent.co.uk, has revealed that buyer demand levels are on the decline in the fourth quarter of 2022 as economic pressures and the increased cost of borrowing continue to force many people to reevaluate their home buying aspirations. GetAgent’s Hotspots Demand Index monitors homebuyer demand across England on a quarterly basis. Current demand is based on the proportion of stock listed as already sold (sold subject to contract or under offer) as a percentage of all stock listed for sale. E.g, if 100 homes are listed and 50 are already sold, the demand score would be 50%. The latest index shows that across England, buyer demand is currently at 48.3% which marks a -9.2% decline since Q3 2022 and -17.3% decline since this time last year, suggesting that the pandemic-inspired property boom is being brought well and truly back down to earth by the significant economic pressures facing the nation’s would-be homebuyers. England’s strongest sales demand hotspot is currently Durham where it sits at 68%. This is -5.6% lower than Q3 of this year, but -14.6% lower than this time last year.  City of Bristol, which ranked as the number one sales demand hotspot last quarter, now ranks second with 56.6% while Surrey (56.4%), Greater London (55.9%), and the City of London (54.8%) all maintain good levels of demand despite all experiencing quarterly and yearly declines.  In terms of annual change, the worst hit places are the Isle of Wight (-25.5%), East Riding(-25.5%), and Derbyshire (-24.8%).  The worst hit places in the last quarter are East Riding (-12.9%), Bedfordshire (-12.8%), and Staffordshire (-12.7%). In the search for good news, optimism is hard to come by. No parts of England have experienced sales demand growth in the past year or the past quarter.  The smallest annual declines have been reported in Lincolnshire (-4.7%), Leicestershire (-8.0%), and Suffolk (-9.8%), while the smallest quarterly declines are in Suffolk (-3.6%), Durham (-5.6%), and Wiltshire (-5.9%).  Co-founder and CEO of GetAgent.co.uk, Colby Short, commented: “After a couple of years of manic demand, activity, and price increases, we end 2022 with a gentle bump back down to earth. Economic gravity was always destined to enforce the declines we’re currently seeing and, in many ways, it’s a surprise that it’s taken this long to happen.  You’re going to read all sorts of pessimistic property headlines over the coming months, but the forecast isn’t actually that bleak. Look at the long-term history of house prices and you’ll see that the property market is never down for long, regardless of how many pandemics and economic crashes are thrown its way. However, the fortunes of the housing market are very much in the hands of the Bank of England at the moment because, until interest rates come down and borrowing becomes more affordable, lenders are going to be tighter with their mortgage offers and buyers are going to be nervous about taking on these relatively high levels of risk.” Data tables Data tables and sources can be viewed online, here. Building, Design and Construction Magazine | The Choice of Industry Professionals

The latest industry index on property fall throughs by property purchasing specialist, House Buyer Bureau, has revealed that there has been a sharp increase in both the number of property transactions falling through in Q3 of 2022, as well as the cost associated with these fall throughs.  House Buyer Bureau analyses the number of transaction fall throughs across the UK property market, what this means in terms of the average cost of a fall through and what the total cost to the property market is as a result. The latest index shows that in Q3 of last year, 90,188 transactions are estimated to have fallen through, a 15.6% increase on a quarterly basis and a 3.6% uplift versus this time last year. This is also the highest quarterly number of fall throughs recorded over the last five years.  What’s more, a combination of runaway inflation and increasing house prices have pushed the average cost of a property transaction collapse to £3,337.  As a result, House Buyer Bureau estimates that homebuyers and sellers were hit by a total estimated cost of almost £301m as a result of their transactions falling through in Q3 2022.  This total cost is not only 18.7% up on the previous quarter, but also 16.3% on an annual basis.  There is one silver lining for the nation’s buyers and sellers, as House Buyer Bureau estimates that the total number of fall throughs seen in 2022 will still sit some -6.7% below the total seen in 2021.  However, this is largely down to the fact that the first two quarters of the year saw a far lower level of transactions falling through, with the latest quarterly spike suggesting that the property market could be in for a rougher ride in 2023.  Managing Director of House Buyer Bureau, Chris Hodgkinson, commented: “We’ve seen a consistent increase in the number of property transactions falling through in recent years and despite a fairly settled start to 2022, the latest data shows that the number of sales collapsing hit a five year high in the third quarter of 2022.  This is almost certainly due to the turbulence that came via the mortgage sector in September, as lenders pulled a raft of products and increased mortgage fees in reaction to the Bank of England’s aggressive attempts to curb inflation via a string of consecutive interest rate increases. As a result, many buyers found that they could no longer afford the cost of borrowing which has led to swathes of property sales falling by the wayside during the second half of last year.  Unfortunately, we saw a further hike to the base rate come in December and so the likelihood is that this increased level of property fall throughs will not only be apparent within the final quarter of 2022, but it’s likely to be maintained into 2023. Data tables Data tables and sources can be viewed online, here.

Lee Martin, Head of UK for Unlatch, the new homes sales progression and aftercare platform for developers and housebuilders, provides his thoughts on what we should and could expect from the new homes property sector and reality of 2023. With 2022 coming to a close, the UK finds itself under somewhat of a financial dark cloud. Some are calling it a recession, most believe it to be the obvious symptoms to many factors currently being experienced on a global front, not just within the UK.  This is coupled of course with a cost-of-living crisis. According to Halifax’s House Price Index, since the UK entered this difficult economic stage, the average house price fell by 0.4%. On top of this, in the last quarter of 2022, the Bank of England raised interest rates from 2.25% to 3.0%, and again to 3.5% in December, triggering a low number of mortgage approvals and sellers accepting 3% below the asking prices on their homes. Against this backdrop, estate agents Savills and Knight Frank expect house prices to drop by 10% and 5% respectively in 2023. Economic experts Capital Economics are forecasting that in quarter four house prices will be 8.5% lower than they were in Q4 2022. However, is it all doom and gloom? I personally think not!  Let us not forget, since Covid we have seen unprecedented buoyancy in the market, and thus it has become a seller’s environment, pushing prices to ever higher false premiums. Seeing prices coming down does not mean they are dropping, but levelling out to where they should have and would have been. A 5% fall in house prices next year would see most of the market’s current over-valuation reversed by December 2023. Mortgages are slowly becoming more favourable week on week, people will always have a reason to move, be that due to having children, those children getting older and that means the need for more space. Divorce often pushes people to have to sell and buy, FTB’s wanting to get on the ladder (often with help from Bank of Mum & Dad), and even, and not to sound morbid; death of a partner.   The costs to rent are rising, where many would prefer to invest in something tangible rather than paying off someone’s mortgage, yet for those who can’t scrape a deposit together, there will always be investors snapping up properties to let, and with a thriving new homes market, buying is simplified and made more affordable through more energy efficient living, and availability in stock or off plan plots. New Homes will always turn on its survival mode in a harder market, regardless of the climate as there are many tools able to be used to help broker a deal, where in contrast, the Jones family selling their 4 bedroom semi on Pennywell Avenue in Uxbridge are not able to offer such incentives. These negotiating tools can consist of, for example, stamp duty paid, mortgage payments for a specific timeframe, discounts on the property in question, utility bills or service charges paid for a limited time, government schemes such as the old HTB and Shared Ownership, along with the fact that developers will often have to sell, so there is a will to achieve the end result rather than if vendor on an established property may decide against selling if they do not achieve the price they require to move on themselves. And of course, with PropTech firmly on the scene, more so for the new homes industry, we will continue to see an even better, more improved transparency between developer and purchaser. Never underestimate the glory in a quality buyer experience and customer journey, something we here at Unlatch saw a long time ago when we created our white labelled Purchaser Portal, and branded app.   Added to this, our new E-Commerce module, allowing people to purchase in real time, regardless of location or time zone, allowing those overseas purchasers to continue their spending and taking advantage of the climate and exchange rates, where buyers from around the world have continued to purchase at high and consistent levels over the last 6 months where more localised buyers have of course slowed down, mainly due to being stretched on their mortgage rates and repayments. To conclude, a rapid reversal in mortgage rates would have the greatest impact on buying power, enabling buyers to borrow for their next move without over-stretching themselves. However, it is important to mention that those who had not started their new home journey until now would not have known or felt the strain of how much more they now must pay monthly on their mortgages. A far contrast to those who were already on the search, now feeling the obvious and blatant difference and ‘pinch’ which could be off putting; which is where I use the analogy of the old Saturday evening television series Bullseye; “here’s what you could have won”, and we are not talking about a caravan or a speedboat. If a modest decline in house prices took place, that desire to buy could be further accelerated. Clients of Unlatch, along with new prospects are happy to invest into the tools we offer, from SME to National developers and housebuilders, which should give confidence to many that property is still and likely to always be the safest investment or asset to turn to… I would always rather have a home than crypto currency personally, but perhaps that reasoning is simply because I understand the property market, and have seen a couple of blips in the market in my 23 years of working within the industry… what goes up must come down… until it goes up again. Building, Design and Construction Magazine | The Choice of Industry Professionals

A nationwide insulation funding scheme aimed at middle income householders living in energy inefficient properties has been welcomed by insulation specialist Actis. The £1 billion ECO+ scheme, which launches in the spring and will run for up to three years, builds on the existing ECO (Energy Company Obligation) schemes, which have been running since 2013. Actis UK and Ireland sales director Mark Cooper welcomed the move, which covers home owners not eligible for the existing funding, whose target audience is people on benefits or in fuel poverty. “More than 25% of the UK’s traditional housing stock is more than a century old, much of it very leaky when it comes to keeping heat in,” he said. “Research shows that more than 12 million homes had EPCs of D or worse in 2020. In fact, we have some of the least energy efficient housing stock in Europe. Installing insulation is the most cost-effective way of stemming the flow of heat escaping from these homes. “With energy prices affecting everyone, not to mention the impact on the environment, it makes sense to ensure that the existing building fabric is as energy efficient as possible. Hopefully this new scheme will encourage people who have been considering improving the energy efficiency of their homes to go for it.” The original ECO schemes have so far seen energy efficiency measures installed in 2.4 million homes nationwide. The new initiative is aimed at those whose homes are in council tax bands A to D in England, A to E in Scotland and A to C in Wales – and which have EPC (Energy Performance Certificate) ratings of D or lower. Eligible households will be able to receive grants of up to £1,500 for insulation, which the government estimates will save them around £310 a year on their heating bills. Details are yet to be announced, and householders are being advised to contact their local council or energy supplier to find out whether they are participating.  The news follows an announcement in the autumn statement that the government is to invest an additional £6bn between 2025 and 2028 to support its ‘energy demand reduction target’ to reduce demand by 15% by 2030. Building, Design and Construction Magazine | The Choice of Industry Professionals