Date the rate, but marry the home

Understanding the Impact of Interest Rates on the Property Market

Have you ever pondered the intricate dance between interest rates and the property market? Get ready to be captivated!

Did you know that until January 2009, the Bank of England base rate had never dipped below 2%? The anticipation of a return to the record lows witnessed from 2009 to 2021 echoes sentiments reminiscent of 1952 when rates surged from 2.5% to 4%.

However, it took until the close of 2008 for rates to revisit or dip below this threshold. 

Are you waiting for the intrest rates to return to the record lows of pre 2022? The homes seekers of 1952 waiting for the right home yet at the rright time when rates are more competitive would have had to wait 56 years for that home move!

Unveiling the Numbers:

Over the subsequent 56 years, UK property prices skyrocketed by an astounding 8,193%, surging from £1,891 to an impressive £156,828. It's a testament to the enduring dynamics of the property market, shaping and reshaping itself against the backdrop of fluctuating interest rates.

Embracing a New Reality:

Buyers and sellers must come to terms with the fact that the era of historically low interest rates has concluded. While recent inflation data reveals a downward trend at 4.6%, marking a fifth consecutive month and the lowest since October 2021, mortgage rates have responded favourably, experiencing a decline over the past three months.

Current Market Dynamics:

Despite the base rate pausing at 5.25% after fourteen consecutive increases, and discussions hinting at it falling short of the predicted 6%, historical evidence indicates that higher rates may temper rising prices without causing a complete collapse.

In today's housing market, where demand persistently outstrips supply, the pressure on house prices endures.

Navigating Headlines and Realities:

As the housing market transitions into a more predictable seasonal rhythm, expect headlines that may misconstrue or exaggerate the state of house prices. Disregard the confusion or fear they may evoke, recognizing the normalcy of slowing house price growth under comparatively higher interest rates.

Local Performance:

Delving into the local market dynamics, areas like Edgbaston and Halesowen have witnessed increases in sales agreed with latest stats from October compared to last year at an average of 22.96% and asking prices at 6.13%.

However, nuances emerge, such as a current average discount of 4.2% on asking prices compared to zero a year ago, signifying a 1.93% increase in local prices when factored in.

Looking Ahead:

With September's completed sales reporting a 1.32% uptick in prices locally compared to the previous year, combined with a pending "rates war" between mortgage lenders plus the downward movemnet of inflation, it's evident that confidence is returning to the market. For those anticipating significant drops in house prices and mortgage rates, akin to the waiting game of 1952, patience may be the key.

In conclusion, the current market landscape prompts a simple yet profound mantra: 'Date the rate, but marry the home.'

Thank you for considering these insights. If you have any questions or seek further clarification and home moving support, please feel free to reach out.

Andy McHugo