Welcome to this autumn briefing which will hopefully be both interesting and accurate. We will cover a few topical issues, but of course you can contact us any time for further clarification.
The starkest statistic for the region is the paucity of London buyers relocating to the area, with local estate agents reporting a 50%+ reduction in their numbers.
The reasons are varied. The Welsh Assembly is guilty of scaring off some potential purchasers with increased taxation and threats of more to come. But whilst this may be true of second homeowners and the higher rate payers of LTT, this does not explain why Herefordshire and West Gloucestershire are suffering in equal proportion. It is actually the London market itself, which was hit hard by the Pandemic that is the issue.
Having said that, London is now recovering well and the buyers will be back. Monmouthshire and the Marches still remain some of the prettiest and most accessible places to live in the UK.
Ignore the headlines ‘House Prices Slump’ – this is sensationalism to sell newspapers. Turnover and transaction levels are down somewhat, with asking prices falling nationally about 6%, which considering their 25-30% rise in the last three years is not a catastrophe. The annual change in the UK house price index was 3.8% in the year to June. The true reality is that common sense is returning, which is a massive relief, after the rollercoaster of the last 3 years.
Examining returns from the property portals such as Rightmove, Prime Location, On the Market etc. one could despair of the amount of price reductions. However, this should not be seen as a drop in values, as they were almost certainly never priced correctly in the first place. Selling agents have to win instructions, and nearly always what potential vendors wish to hear is a high valuation. Remember the old adage that ‘an honest estate agent is bust.’
We could well find that by the end of the year house prices are down as much as 10%, but is this a disaster? Certainly not for the young trying to buy their first house and that must be a priority. Also, not for the considered, sensible, rational buyer making a long-term move. In ten years’ time, today’s prices will look cheap.
The ever-rising interest rates are certainly causing alarm for many. In February 2022 interest rates were 0.5%, with banks and institutions expecting potential rise to 6.5% or even 7%, before returning and settling at around the 5% mark. For anyone under the age of 40, this will seem an enormous rise, although for maturer house owners they are still well below what one might consider the norm. The days of ‘cheap money’ are over and probably not before time. Salaries are rising, especially in the professions and higher echelons of the public sector, and house prices will rise accordingly.
Covid brought a shot in the arm for the country sector, which had never properly recovered from the twin blows of the 2007/2008 Financial Crisis and Brexit. The market may be suffering a hangover from this, but we all have short memories, house buyers shorter than most. With more people WFH and commuting distances significantly stretched, we expect to see London buyers returning and a pretty rosy future for the local market.
Yes, there will be bumps along the way – a potential new government, the ongoing war in Ukraine etc, but the opportunities for buyers to secure a really special home are out there.
Everyone’s circumstances are different, so please do call for an informal chat. Stacks has 17 offices across the UK, so we can help with your property and land search either here in Monmouthshire and The Marches or around the country.
