As we approach the end of 2022, UK households face significant challenges including high inflation, soaring energy bills and a cost-of-living crisis, leading to speculation that the housing market could suffer over the next year.
While we expect a fall in house prices and demand to slow, we should not ignore the significant changes we have seen in consumer behaviour over the last five years.
MPowered’s House Pace Index documents this shift, and paints a picture of a resilient market, propelled by the urgency of homebuyers and vendors at the centre of it.
However, with half of all offers on houses falling through, our index showed that there has been a clear disconnect between the insatiable demand for property and the infrastructure that exists to keep up with the pressure this puts on the market.
The index reported the rate at which buyer behaviour has changed.
For instance, the percentage of properties which received an offer on the same day has risen from 26% in 2018 to 48% in 2022, demonstrating the growing competition in the market to secure a property, and to secure one fast.
This desire to secure a property as quickly as possible is particularly evident in the younger generation, with 60% of 18-34-year-olds now placing offers within roughly 24 hours.
These figures themselves become self-fulfilling, adding to the feeling of intense time pressure already faced by those looking to buy a home.
Alleviating this stress and uncertainty for those entering the property market must be a priority for the industry moving forward.
The intensity of the situation is compounded by a number of challenges for buyers that have been revealed by the House Pace Index.
With the rush to buy property putting sellers firmly in the driver’s seat, expectations from those looking to sell their properties are becoming increasingly stringent.
Not only do 41% of sellers prefer a cash buyer, but over two thirds of sellers now want a chain free process.
The ability that vendors currently have to demand high prices and convenient offers puts more vulnerable buyers, such as first-time buyers, at a significant disadvantage, and is something that must be addressed to create a fairer, and more inclusive market.
Factors making it harder for buyers to complete on a property transaction are not limited to stiff competition.
The House Pace Index found that 37% of buyers in 2021 lost out on a home because of survey issues and over the course of five years, one in four transactions fell through for the same reason.
The situation has only been made more difficult by the building and fire safety issues on a number of UK residential and commercial properties that have been brought to light over the last few years.
The resulting situation is a competitive market where increased urgency to purchase property on the buyers side is outpacing the rest of the housing market. Despite the number of offers being placed, over 50% of buyers have had an offer fall through, highlighting the severe shortfall of the market in meeting the needs of consumers.
While rising interest rates and inflation will no doubt lead to ongoing turbulence in the market in the coming months, the trend that the House Pace Index has revealed is the product of a long-term shift in the attitude of consumers towards the property market, and should be treated as such.
Compounded by the impact of the pandemic, there is, and will continue to be, rising interest in urban markets, with flats and smaller dwellings increasingly attractive options to those looking for an affordable way to buy their first property.
The House Pace Index confirms that we should accustom ourselves to these long-term behavioural shifts in the market, and adapt to rapidly changing consumer expectations.
We must ensure that processes are in place for consumers to have certainty throughout the buying process, while also meeting their revised requirements which have appeared following the pandemic.
Emma Hollingworth is managing director of mortgages at MPowered Mortgages
