In an age of soundbites and sensationalism, the UK property market—notably right here in Lancaster—usually finds itself misconstrued by basic narratives.
Whereas we can not ignore the challenges of accelerating mortgage charges and shifting purchaser preferences, it’s important to understand the broader context to know what’s occurring within the Lancaster property panorama.
The UK housing market is at the moment at a crossroads, characterised by its lowest home worth progress since 2012. Excessive mortgage charges are making a major dent in market exercise, affecting every thing from purchaser demand to the amount of property gross sales.
Lancaster properties are nonetheless promoting however not on the price or degree they had been in 2021. Due to this fact, appropriately pricing your property on the market can’t be underestimated. Let me clarify why, then the explanations behind the present state of play nationally, and eventually, the precise story of what’s occurring now (and sooner or later) in Lancaster.
The Significance of Accurately Setting an Asking Value for Your Lancaster Residence
Placing your Lancaster property in the marketplace at too excessive an asking worth can considerably deter potential consumers and restrict the quantity of people that come to view it. Consumers usually have a finances vary in thoughts, and in case your property is priced above comparable properties within the space, it’s prone to be filtered out of search outcomes and go unnoticed.
Even when the property will get some consideration, the inflated worth can ship a message that you simply’re not critical about promoting or unwilling to barter. This can lead to your property languishing in the marketplace, which may necessitate future worth reductions.
Over time, a stale itemizing might change into stigmatised, main consumers to suspect that one thing should be flawed with the property past its excessive worth.
Thus, setting a sensible, market-aligned asking worth is essential for attracting a broad pool of certified consumers and facilitating a faster, extra profitable sale.
The Impression of Excessive Mortgage Charges
Excessive mortgage charges are placing a pressure on the housing market. The most recent knowledge reveals a major fall in demand from consumers — a couple of third lower than the common throughout the identical interval during the last 5 years (2018-2022). Whereas there’s a larger variety of properties accessible on the market now in comparison with the earlier two years, fewer properties are promoting.
Nationally, this yr, the variety of properties bought stc has been 750,113 (to the top of August). That very same gross sales determine to the top of August 2022 was 903,799 (a 17% lower), and to the top of August 2021, 1,020,439 (a 26.49% lower). As you’d anticipate, mortgage-backed gross sales are notably hit exhausting, anticipated to be simply over 1 / 4 decrease than final yr. Money gross sales are anticipated to be much less affected, however the total market exercise stays sluggish.
An attention-grabbing facet of the present housing market is the distinct regional disparity. Wanting on the £ per sq. foot of the gross sales agreed (not accomplished) of the August 22 gross sales vs. August 23.
East of England -4.85%
North East -3.71%
South East -2.99%
East Midlands -1.72%
Yorkshire and The Humber -0.85%
West Midlands -0.62%
North West -0.54%
Outer London -0.44%
Inside London -0.13%
South West 2.85%
Within the East of England (as a area), home costs have fallen by slightly below 5% during the last yr. Conversely, there’s been a 3.8% enhance in home costs in Scotland.
First-time Consumers and Affordability
Excessive mortgage charges are affecting first-time consumers disproportionately. In 2021/2, low mortgage charges made shopping for a Lancaster dwelling cheaper than renting, spurring a wave of first-time consumers. Nonetheless, persevering with with the regional theme, with present mortgage charges hovering above 5%, renting has now change into cheaper on common than shopping for for a first-time purchaser property in London, the South and components of the Midlands, even regardless of excessive rental progress in recent times (though it’s nonetheless cheaper to purchase than hire within the North, Wales and Scotland).
The Position of Wage Development
Regardless of the awful outlook, there’s a silver lining. Sooner wage progress is making housing extra reasonably priced. Common wage rises of 8.2% over the previous yr are serving to to stability out the impact of twenty-two.56% greater mortgage funds on first-time consumers’ family incomes (up from 31.9% in Q2, 2022 to 39% in Q2, 2023). Because of this, the hole between home costs and earnings is closing, and affordability is predicted to enhance by 10% over 2023.
Concentrate on Lancaster
In 2021, a mean of 132 properties had been coming onto the market within the Lancaster space per thirty days, while there was a mean of 147 properties promoting month-to-month. Due to this fact, there was a mean internet lower of 15 properties per thirty days within the Lancaster space to purchase (therefore, the Lancaster property market was doing very nicely).
In 2022, a mean of 138 properties had been coming onto the market within the Lancaster space per thirty days, but there was solely a mean of 121 properties promoting every month. There was an growing provide of properties (common internet enhance of 17 properties every month), however demand (property gross sales) didn’t observe go well with. Consequently, saleability charges dropped as Lancaster householders solely had an 87.5% probability of promoting.
To the top of August 2023, there was an extra enhance in new properties coming in the marketplace (a mean of 153 properties coming onto the market within the Lancaster space per thirty days). But, demand has dropped additional as solely a mean of 113 properties have been promoting per thirty days, that means there was a mean internet enhance of 40 properties per thirty days within the Lancaster space to purchase. Consequently, saleability charges have continued to drop even additional as Lancaster householders have solely had a 74.3% probability of promoting this yr.
Lancaster = LA1 and LA2.
The Curse of Overvaluing and The way it Might Value You Your Dream Residence
I hope I’ve confirmed to you why it’s wise to place your property in the marketplace at a sensible asking worth from day one and never be tempted to overcook the preliminary asking worth. You solely have one probability of a property being a brand new instruction (and all the joy and focus that creates).
Overvaluing properties is changing into a regarding development in Lancaster, usually led by property brokers extra desirous about itemizing as many properties as doable relatively than making precise gross sales. Such overvaluation harms householders, tempting them with unrealistically excessive costs solely to advise worth reductions later. The issue is your dream dwelling may need bought by then.
Whereas itemizing your Lancaster dwelling at a worth 10-20% greater than its precise worth might sound tempting, this technique usually backfires. Analysis from Which reveals that overpriced properties linger in the marketplace and ultimately promote for lower than these priced appropriately from the beginning.
Moreover, some property businesses incentivise their workers to checklist properties relatively than promote them, exacerbating the difficulty. Because the Lancaster property market stabilises, setting a sensible asking worth is essential for attracting critical consumers and attaining a well timed sale.
The Way forward for the Lancaster Housing Market
The speedy future doesn’t maintain a lot promise for dramatic home worth progress in Lancaster, neither is it anticipated to fall dramatically (learn my earlier articles on this).
Nonetheless, components like an ageing inhabitants, extra versatile work preparations, a powerful labour market, and excessive immigration charges may stir market exercise within the subsequent few years. Mortgage charges are additionally anticipated to fall under 5% later this yr, though the influence might solely be felt within the first half of 2024.
The UK housing market is navigating by means of turbulent waters with excessive mortgage charges and a extreme slowdown in home worth progress. Nonetheless, the rising development of sooner wage progress may very well be a game-changer, making housing extra reasonably priced in the long run.
Moreover, anticipated drops in mortgage charges and sociodemographic adjustments are anticipated to drive market exercise within the coming years. All eyes will likely be on how these a number of forces will form the UK housing market within the foreseeable future.
Consumers and sellers could make extra knowledgeable selections by understanding these tendencies and potential future shifts. The market may be beneath pressure now, and householders have to be reasonable with their pricing; these indicators recommend we may be heading in the direction of a extra balanced and accessible market within the coming years.
What are your ideas? I’d like to know. You possibly can name me on 01524 843322 or electronic mail me at email@example.com
Thanks for studying