Residential Property News Update.
For all but the wealthiest, the current London Property News does not look great, with residential buyer demand, sales and house prices all continuing to decline as concerns over real-time mortgage affordability continue to spread, thus negatively affecting the once-thriving London real estate market.
In fact, mortgage affordability worries are continuing to be the single largest issue to negatively affect the UK’s formerly robust property market, with nearly all parts of the UK seeing house prices retreat, but London and the South seem to be hardest hit.
This fall-out is, of course, over a year on from the disastrous Truss/Kwarteng mini-budget that overnight wiped out tens of billions of pounds of assets from the UK markets, and sent mortgages unexpectedly skyrocketing for shocked UK homeowners.
‘Obviously, in times like these the higher-end sales to cash buyers continue apace and even grow, while the sales driven by mortgage products slow down to almost static levels’ says Steve Taylor, jointly based in the UK and USA, with decades of experience in international property markets.
This comment is born out of research conducted by top UK Estate Agent Savills, whose research found that the market for ‘cash-only’ luxury homes in London has remained ‘robust’.
In a marketplace where buyers reliant on mortgages and mortgage products are the ones struggling the most, there’s an obvious knock-on effect to both the types of houses that are selling and onto the property rental market too.
As a direct consequence of this, the residential lettings market, unlike the residential sales market, demand is continuing to rise, and in most places in the UK is outstripping demand.
‘Because people are unable to afford mortgage products, they look to the rental market as a solution’, says Stephen Taylor. ‘Of course, that brings problems all of its own, because now demand is outstripping supply and that means – you guessed it – that prices for rental properties rise too. It’s a potentially explosive problem, but it is a long way yet from becoming a housing crisis.
In most areas of the UK, this will mean rental prices rising. But in London, where rents are already sky high, there is doubt that renters could be pushed much further as it appears that the prices are already as high as they’re going to go. Most property commentators believe London rental prices are not going to be able to go any higher, as affordability levels are already likely to be at – or even beyond – their limits.
Steve Taylor has some final words of wisdom for us on this topic. ‘Property Markets are constantly shifting and changing, and predicting what’s coming is an art form in and of itself. And of course, there are always things – like that unexpected and now infamous mini-budget from over a year ago – that take the market by surprise and basically shuttles everyone’s plans.’
‘We know that for every up in the market, there will be a down, for every corresponding movement there is a counter-movement, and so on. It’s all about balance, after all.’
‘Right now, the counter-balance to the nervousness around the mortgage market is that the lettings or residential leasing market is going through the roof. There will be a swing in the opposite direction – perhaps a gradual one, or perhaps a sharper one – but the pendulum will swing back. Predicting when is obviously what property investors, developers, moguls, and commentators are desperately trying to do right now. Some of them will get it right – others won’t.’
Our final concluding thought on this topic for this article is this – someone trying to predict the exact moment the housing market swings and/or changes is likely to make more dramatic mistakes than someone who simply tries to keep abreast of, and up-to-date with, the latest news to track the inevitable change as it happens.
Written by Steve Taylor, Property Mogul and Entrepreneur
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