Just a few weeks into the year and we might already be having to question whether predictions of a serious downturn in purchase activity through 2023 could actually be some way off.
The recent house price index from Rightmove has put the purchase cat amongst the housing market pigeons, not only with its monthly increase in prices – something few would have anticipated – but also its suggestion that significant pent-up demand for purchasing is starting to be seen.
Now, of course, there are a number of caveats to this, not least the fact that Rightmove’s index focuses on asking prices, which can of course differ significantly from the amount people actually end up paying for the properties.
However, there is certainly a logic to the analysis, not least because the past few months have been so turbulent and uncertain that it makes absolute sense for those who might have been thinking about purchasing at the tail-end of last year to have put those plans on hold until there appeared to be a greater degree of normality.
Thankfully, that ‘normality’ does appear to be back, and the future prospects – certainly for rates – chimes more with the pre-‘mini Budget’ market, than it did during Autumn.
We await the next decision by the Bank of England MPC, and it is still likely to increase Bank Base Rate, but rates have certainly been falling in recent weeks, and it is to be hoped that with inflation likely to fall, we will see further drops in product rates through the rest of 2023.
That greater level of certainty, and indeed a greater ability for borrowers to get the level of loans they need and require, is likely to bring in more committed purchasers and it would appear that – even in the early days of January – Rightmove figures are starting to show this.
It said that the number of prospective buyers contacting agents was up 55% in the last couple of weeks, while overall buyer demand was 4% up on the last ‘normal’, pre-Covid housing market of January 2019.
That move back to ‘normality’ should not be underestimated, because there’s no doubting that there’s been very little normal about the market in the last few years, and anything resembling that period points to a much more stable and certain market that we can all get our heads round, not least those wanting to buy a home or move.
Of course, a further caveat here is the ongoing issue of property supply, and it’s one thing to be wanting to buy a property, it is another thing entirely to be able to find one suitable. And that too, leads us back to a point where perhaps the big, predicted drops in house prices won’t play out as anticipated – if demand is on the up, then with supply still at very low levels, then we might all believe prices are not completely destined to fall during the rest of 2023.
If the last few years have shown us anything, it is just how robust the house market can be, and how potential purchasers are willing to jump through and over all kinds of hoops and obstacles in order to be able to secure the property they want/need.
This of course leaves advisers in perhaps a better position than we also might have believed. Again, this year was being touted as wholly reliant on remortgage activity, but if purchasing does hold up, then advisers should certainly be able to take the bulk of available business in this space, given how increasingly complex client’s finances and circumstances are, and indeed how quickly the mortgage market can (and is) changing.
Within such a marketplace, time is always of the essence, and nothing can slow up the entire process then a poor decision when it comes to the client’s conveyancer. When a property sale can take the best part of five to six months to get through to completion, it is absolutely vital that your clients are getting access to the very best conveyancers, who are specialist in this space, and can work to the timelines required.
If an individual is coming to the adviser for their mortgage, why wouldn’t they (at the very least) consider advice and a recommendation for a conveyancer? The answer is of course, they will, and anything that is likely to make their life easier, and to also ensure the adviser is a welcome ally and heavily involved in the conveyancing, is likely to be welcomed. Don’t miss that opportunity for any client – whether they are part of this ‘new’ group of purchasers or the remortgage business returning to you.
Mark Snape is chief executive officer of Broker Conveyancing