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A downbeat perspective is understandable but there are positives to be found

First published by Best Advice

Turbulent times fuel a sense of uncertainty

It wouldn’t surprise me at all, if you’re feeling somewhat discombobulated about life at the moment – after all there is a lot to get to grips with, to try to contend with, and to try and make sense of.

The invasion of Ukraine by Russian while many miles away feels like an existential threat to all of us here, and I’m struggling myself with how I respond to that, what I should be doing, and the feelings it leaves me with.

Around this of course we have our working lives. Our worries about the market, our businesses, our jobs, etc seem to pale into insignificance given what the people of Ukraine are going through and again it’s difficult to marry up those feelings as well.

However, no one says that you can’t have worries or concerns about multiple things on various levels at any one time. Undoubtedly you will be watching the news with horror, but our lives also have to go in, and work plays a part in that.

Rises to the cost of living impacts consumer spending

It’s unclear just how much impact global events are going to have on the UK housing and mortgage markets, but it seems pretty clear that ongoing rises in inflation/the cost of living, etc, is going to play a significant role here, particularly in terms of mortgage affordability but more widely in terms of consumer confidence.

I read a recent piece with research from Market Financial Services which touched on growing concerns from would-be property purchasers around rising levels of inflation and rising product pricing, and also read some recent anecdotal evidence from an adviser who had two clients pull out of their planned purchases citing the rising cost of bills, etc.

We would be clearly naïve to think, that coupled together, all of this isn’t going to have an impact on consumer decisions, particularly when they are likely to be around the biggest purchase of their lives. There will also be an impact in terms of mortgage affordability as well – we’ve heard of some lenders already changing their affordability calculations in order to factor in the rising cost of energy bills, petrol, etc, and what this means for overall household budgets.

While demand exceeds supply, property sales will continue to flourish

In that regard we may well see some impact on activity, but I can’t help thinking we have been living with a major ‘threat’ to activity for some time, and that is the level of housing supply coming to market for sale. For a long time, demand has outstripped supply by some margin, and even if the current economic situation does temper that demand, my own feeling is that current supply levels mean that property will continue to be sold.

And while it is early days right now, recent data from Rightmove, for example, suggests it has seen no reduction in the number of properties for sale coming onto the portal, which is at least something of a positive here.

Some might even argue that demand for property does need to tail off a bit, given the huge boost it received as a result of the pandemic and people looking for different homes/different areas to live in. A greater level of equilibrium between demand and supply should also temper house price rises as well, which clearly can’t continue to run at double-digital levels for the long-term.

It is difficult to draw conclusions at the moment, but there is still much to be positive about here in the property market. Property priced at the right levels continues to be sold quickly, and in terms of future transactions we are nowhere near a level which suggests we are merely relying on the traditional death/debt/divorce reasons for properties being sold.

Lenders still want to lend

People are still genuinely looking to buy, and as has been mentioned numerous times, there is still an abundant supply of mortgage lending waiting to find a ‘home’. Lenders want to lend, and while pricing might be inching up – which in itself will be a new thing for many borrowers to get their heads round – rates are still likely to be low in historical terms, certainly over the short- to medium-term.

Even if, as anticipated, Bank Base Rate ends this year at 1.25%, competition amongst lenders may well mean that rates don’t rise by the same level, and even if they do, they will still be very competitive. Plus, I’ve read recently of certain lenders dropping rates – this market shifts and moves all the time, and not just in one direction.

So, while I understand there is a lot to get one’s head around at the moment, wider concerns about work, and in particular the UK housing market, may not be as severe as some parties are making them out to be. There is still plenty to be positive here, but I get why you might not be feeling that way just right now.


Simon Jackson is Managing Director at SDL Surveying


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