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Rightmove’s latest data this morning shows that there has been a 23% increase in inquiries from people interested in renting. This leaves the total number of people wanting to rent or sell a property just 1% lower than last year.

After a turbulent couple of months, there are signs that availability and mortgage rates are starting to settle. There are also indications that they may drop further next year. This is leading some potential buyers to look at the rental market for a short-term solution while they wait to see how mortgage rates go.

The jump in mortgage rates has been particularly hard on first-time buyers, particularly those already stretched financially.

These future buyers will likely face more competition to rent a home than they would in the real estate market. Also, there is less choice. The number of available rentals homes, including studios and one- to two-bed properties, is down by 4%, whereas it is up 13% in the sales market.

Rightmove’s survey revealed that 42% of potential first-time buyers who had plans to climb the ladder within the next few years have their entire deposit saved. Another 43% are still saving.

This means that there are potential first-time buyers who will be able to buy once they feel more financially secure. These ready-to-go buyers could see an opportunity to enter the market in the New Year, particularly if they have more financial security, thanks to the Autumn Budget, which ensured stamp duty savings through 2025.

An average of 36 inquiries per property were received by letting agents. They also spend nearly six hours per viewing each property. Rightmove reported that this market is the most competitive in terms of rental property markets, with four times the number available for rental properties.

Rightmove’s property expert Tim Bannister said that it is understandable why some buyers, especially first-time buyers are anxious for more financial security.

There are indications that mortgage rates are starting to settle down. These indicators suggest that they will stabilize at a higher level than what previous buyers were used to. Someone who has saved their deposit and is ready to move may find this a better time than it was a few weeks ago. This is especially true with more choices and sellers offering more competitive prices in the run-up to Christmas.

Rightmove’s rental expert Christian Balshen said, “It is extremely frustrating for so many people right now, with such high demand. Tenants are trying desperately to get viewings of properties as soon they reach Rightmove. Agents are overwhelmed by the high demand and stock shortage. This is exacerbated by the increasing number of first-time buyers looking for a rental option.”

Research has shown that the average price of one in four London homes has dropped in the last three months.

Zoopla has seen 25 percent of the property sales listings have had their asking prices lowered since September 1, this year.

This data is one of the first signs that political and economic uncertainty has filtered down to the housing market.

Zoopla discovered that some asking prices have fallen by more 10 percent in the past three months. However, more than one-tenth of homes in capital have seen their costs drop by more five percent.

Richard Donnell, Zoopla research director, stated that London’s housing market is behind the rest of the UK because of the pandemic. He said that working from home, slower employment growth, and lower inward migration have all kept demand in check.

“As mortgage rates rise, asking prices for London homes have been reduced by 25%. This is a significant increase in the severity of asking price adjustments.

“Over 13% of homes on sale saw a decrease of five percent or more, up from less that nine percent a year ago.”

Dominic Agace, chief executive officer of Winkworth estate agents, said that the numbers “reflect market changes”.

He stated that asking prices fall when growth slows, but it doesn’t necessarily mean final selling prices are lower.

It also reflects a new reality, moving away form recent times where records were set on a monthly basis to an market where prices today are the exact same as they were last month. Accordingly, asking prices are being adjusted.”

Agace also noted that there was a traditional slowdown in the housing market leading to sellers cutting prices to try to sell before Christmas.

Which area are house prices dropping the fastest?

In the UK homes are selling at three percent below their asking prices.

It stated that the average discount homes sold for in 2021 and 2022 was zero percent, which meant that properties were often selling at their asking price.

According to the property website, discounts will increase in 2023.

The report found that asking price reductions are most common in southern England. This is because sales volumes have dropped the most. Nearly three out of every three homes in South East England and the South East of England reduced their asking prices to attract more customers.

According to its latest housing market report, “History has shown that discounts of five to six percent can lead to flattening or falling prices.”

It is important that sellers who wish to sell their homes are realistic about selling prices. They should also consult agents to get the best advice.

Zoopla stated that falling sales and demand means current sellers have to set realistic asking prices to attract buyers.

One in nine homes (11%) have seen their asking price drop by more than 5% since September. A quarter of homes (25%) have seen the price decrease by any amount, according to Zoopla’s October index.

Zoopla stated that the outlook for mortgage rates was the most important factor to home buyers and people who plan on moving in 2023.

Zoopla anticipates that sales volumes will drop to one million by 2023 from 1.3million in 2022. There will be a sharp decrease in house prices, which could lead to a fall of up to 5% in the most vulnerable markets to rising borrowing costs.

Zoopla’s executive director Richard Donnell stated that the market for housing is adjusting to a reset of mortgage rates, but the likelihood of double digit house prices at a UK level is low.

“While house prices are not expected to rise, we expect a shift in motivations that will drive people to move in 2023 or beyond. This will help to increase sales volumes.”

He said, “The rapid rise in rents, with little signs of slowing down, will increase cost-of-living pressures as well as provide continued impetus for first-time buyers’ demand.”

Polly Ogden Duffy is John D Wood & Co’s managing director. She shared some tips for sellers who are looking to sell their home.

“Competing against other properties of the same price, but without these drawbacks will only result in yours being last to sell.

“A combination of waiting too much to adjust your price and more properties coming on the market in New Year will only increase the number of buyers.”

To say that the last two years have been eventful for estate agents is quite the understatement, with house prices reaching record highs as world-shifting events caused people to alter their priorities when it comes to where and how they want to live.

This increase in house prices, alongside bank rate increases and other financial events has caused the average two-year fixed mortgage rate to hit over six per cent for the first time in many years, with average five-year fixed rates reaching a very similar level, both according to Moneyfacts.

This has led to several mortgage lenders reducing their mortgage products and restricting their availability and acceptance criteria, particularly for mortgages with a loan-to-value ratio of over 90 per cent (ie. mortgages with a ten per cent deposit).

The reason for this is that with a range of factors causing economic uncertainty in the housing market, there is an increased risk of borrowers ending up in a state of negative equity, sometimes known colloquially as a house being “underwater”.

An owner’s equity value is the difference between the house’s full value and the value of loans against it such as the mortgage. 

Initially, a homeowner’s equity is limited to the deposit they paid, but as they pay off more of the mortgage they will, in most cases, increase the amount of equity they have in the property.

In other words, equity is what is left of a house sale after all of the debts have been paid off, and can also increase if the house’s value increases as well.

However, this can work in reverse, and when a home lowers in value, the cost of the mortgage does not, meaning that if there is a property market crash, someone can theoretically owe more towards the cost of a property than the property is worth.

There are other reasons as well, such as in cases where a person has mortgage repayments so low that they do not cover the interest, causing that interest to accrue and increase the cost against the property, lowering equity.

Going “underwater” can make it difficult to sell a home, but as long as you can still make the payments, the situation also does not necessarily have a negative effect.

However, lenders are risk-averse and may avoid providing mortgages where there is a risk that even if they repossess the house in case of non-payment they cannot get their money back.

As London renters have moved out of the central area, high-priced properties such as Purley and Coulsdon are in high demand.

Rightmove data shows a significant increase in property searches around London.

Coulsdon saw an increase of 228 percent in demand over a year ago. Purley saw a rise of 115 percent.

According to estate agents, a two-bedroom apartment in the area costs between PS1,200 & PS1,300 per month.

However, some renters were forced to make offers higher than the asking price in times when the market was most competitive.

A Coulsdon estate agent said that demand rose after the Covid-19 lockdowns. Renters were looking for the best of both worlds. The area has easy access to the countryside, and only 20 minutes from central London.

He said that he wasn’t sure how the market would react to the uncertainty and cost of living in the future.

Mario Creatura, a local councillor for eight years, said that he wasn’t surprised people moved to Coulsdon, London, from other parts of London.

He stated that it didn’t surprise him at all that Coulsdon has seen a surge in demand for housing. It’s a beautiful part of the globe. We are close to the North Downs and have excellent connections to London.

“I think people looking for a house or flat, or even a couple to raise a family, would love what’s available in Coulsdon.

“We have a wonderful high street, with independent shops and excellent transport connections. This is why so many people have lived in Coulsdon for years.

Some believe that inflation and the cost of living crisis could lead to property values falling by 10% to 20% over the next 12-18 months.
It is clear that the Croydon real estate market is extremely interesting right now.

Croydon currently has 2294 properties available for sale (the 15-year-long average is between 2300-2600), which means that house prices have risen significantly.

According to the Land Registry

Croydon property prices increased 6.1% in the past 12 months (or PS23.300)

Robert Kiyosaki said that looking back at the past is the best way to predict the future. It is important to compare today’s situation with 2008’s last property crash.

1. Inflation Rates Increase

The possible cause of the crash can be attributed to the Bank of England’s rise in interest rates. This affects homeowners’ mortgages.

Higher mortgage rates will mean homeowners will pay more for their mortgage payments. This leaves less money for household necessities. Many Croydon residents put their homes up for sale in 2007 to reduce their mortgage payments.

However, newspapers do not mention that 79% British homeowners with mortgages have them at a fixed rate (at 2.03% on average).

A mere 19% of the 20 UK house purchase in 2021 (or 93.2%) had their mortgage rates fixed.

In the short- to medium-term (two to five year), most homeowners won’t see an increase in their mortgage payments for many years. 27.8% of UK house sales were made with cash, meaning that there was no mortgage.

Of the 932 577 UK house purchases made since February 2021, 259 205 were done without a mortgage.

Some people believe this will cause problems when all homeowners are lowered from their fixed rates. In 2014, the mortgage lending rules were changed. Every applicant for a mortgage would have been evaluated at the time of application to determine if they can afford to make their mortgage payments at mortgage rates ranging from 5% to 66%, not the 2% or 3% they might be currently paying.

No pundit predicts that the Bank of England will raise interest rates to above 2%, with a worst-case scenario of as low as 3%. If the Bank of England raised interest rates to 3.3% homeowners would pay 4.5% to 5.5% for their mortgages, which is well within the stress range at the time they applied for their mortgage.

The probability of Croydon property sales or Croydon repossessions is lower because of rising interest rates (both of which cause house prices to fall).

2. House Price / Salary Ratio

A second reason for another crash in house prices is the ratio between average house prices and average wages.

The lower the ratio, the more expensive property it is. The ratio of the average UK house price to the average UK salary was 5.30 in 2000 (i.e. The average UK house cost 5.3 times the average UK salary. The ratio was 8.64 at its highest point just before 2008’s property crash.

This ratio is now 8.85. Some commentators believe we are headed for another housing price crash. They are wrong, however, because today’s mortgage rates are lower than they were in 2007. Take, for example:

In 2007, the average 5-year fixed rate mortgage was 6.19%, just before the property crash. Today it is only 1.79%

The house price/salary ratio remains the same as 2008’s property crash, but mortgages are today 71.1% less expensive.

3. Banks are reckless in lending

Unscrupulous lending practices during the lead-up to the crash were another reason for 2008’s property crash.

Self-certified mortgages were the first instance of reckless lending. Self-certified mortgages are those where the lender does not require income proof.

Self-certified mortgages accounted for 24.6% in 2007

When the economy became a bit sticky in 2008, people who didn’t have enough income (since they were self-certified), quickly put their properties up for sale.

The second aspect of reckless lending by banks was the amount they loaned buyers to purchase their homes. Banks require first-time buyers to deposit at least 10%, and perhaps more. Although 95% mortgages are now available (meaning that first-time buyers only need a 5% deposit), they can be quite difficult to get.

In 2005/6/7 Northern Rock allowed first-time home buyers to borrow 125% off the property’s value. First-time buyers were eligible for 25% cashback on their mortgages!

In 2017, 9.5% of all mortgages were 95% and 6.1% were 100% to 125%.

This means that almost one in six mortgages (or 15.6%) had a 95%-125% mortgage in 2007.

Negative equity is when the property’s value falls below the amount owed on the mortgage. Many Croydon homeowners who had negative equity or were close to it in 2008 panicked about the Credit Crunch. They put their houses on the market.

For a better understanding of the situation regarding mortgage lending in 2021, 2.4% of mortgages were 95% and 0.2% were 100%. The reason is that the mortgage lending rules have been tightened since 2014.

Hence, why did Croydon’s house prices plummet in 2008?

In a nutshell, 2018 saw a flood of Croydon properties come on the market, flooding the Croydon real estate market with properties to buy.

Mortgages were becoming more difficult to get (because of the Credit Crunch), which led to a decrease in demand for Croydon properties.

When there is an excess supply and a lower demand for something, the price will fall. Croydon property prices declined by 16% to 19% depending on which property type, between January 2008 – May 2008.

What was the number of properties available for sale in Croydon during the last housing market crash?

In Croydon, there were 3565 properties on the market for sale in Summer 2007 (just prior to the crash), while a year later, the Credit Crunch brought that number up to 5200.

Croydon house prices fell in 2018 due to the huge increase in supply and decrease in demand.

Today, Croydon has 2294 properties available for sale, whereas the average 15-year-old Croydon property sale is between 2300-2600 properties.

What will happen to Croydon’s property market?

Croydon’s house prices have risen since Lockdown 1 was lifted. This is due to a shortage in Croydon homes available for sale (as noted above) and an increased demand from buyers (the reverse of 2008.

There are signs that the disparity between supply and demand for Croydon property is beginning to improve. However, it will take some time before this has any impact on the Croydon real estate market.

As a result, buyer demand will decrease while the supply of properties for sale (i.e. supply) increases. This will gradually bring Croydon’s property market back to long-term levels and not the housing crash.

I advise you to keep an eye on how many properties are being sold in Croydon at any given time. Only worry if it exceeds the long-term average.

Before I leave, let’s talk about inflation and how it will affect the Croydon real estate market.

What will inflation and cost of living affect Croydon’s property market?

It is clear that rising costs of living will affect buyer demand. People with less income won’t have the money to pay for such expensive mortgages. This will reduce Croydon’s house price growth, particularly for first-time buyers.

However, the decrease in first-time buyers has been offset by an increase of buy-to-let landlords purchasing, particularly at the lower end.

This will help stabilize the Croydon middle-to-upper property market. This will mean that Croydon’s owner-occupiers, mainly Croydon homeowners, will enjoy greater stability in their Croydon homes and find a buyer if they decide to move up the property ladder.

Hence, Croydon landlords are looking to expand their buy-to-let portfolios despite these economic conditions.

I’m seeing new and established buy-to-let Croydon landlords return to the market to add rental properties. Because there isn’t as much competition for first-time buyers, they aren’t being outbid as often.

But, even more important, residential property can be a good hedge against inflation.

First, inflation tends to slow down property values in the medium-term.
Inflation also benefits existing homeowners and landlords, as well as the impact it has on mortgage debt. Croydon house prices rising over time will reduce the loan-to-value percentage of your mortgage debt, and increase your equity. A lower interest rate will be offered to the homeowner/landlord if they decide to remortgage the property in the future.
Third, your fixed rate mortgage payments will remain the same regardless of how much equity you have in your Croydon home.
Croydon landlords who own buy-to-let properties also benefit from inflation. Because rents increase with inflation, this is why it is important to remember. Rents rise, but your fixed-rate buy to let mortgage payments remain the same. This creates the possibility of a greater return on your buy-to -let investment.

As London renters have moved out of the central area, high-priced properties such as Purley and Coulsdon are in high demand.

Rightmove data shows a significant increase in property searches around London.

Coulsdon saw an increase of 228 percent in demand over a year ago. Purley saw an increase of 115 percent.

According to estate agents, a two-bedroom apartment in the area costs between PS1,200 & PS1,300 per month.

However, some renters were forced to make offers higher than the asking price in times when the market was most competitive.

A Coulsdon estate agent said that demand rose after the Covid-19 lockdowns. Renters were looking for the best of both worlds. The area has easy access to the countryside, and only 20 minutes from central London.

He said that he wasn’t sure how the market would react to the uncertainty and cost of living in the future.

Mario Creatura, a local councillor for eight years, said that he wasn’t surprised that people moved to Coulsdon, London, from other parts of London.

He stated that it didn’t surprise him at all that Coulsdon has seen a surge in demand for housing. It’s a beautiful part of the globe. We are close to the North Downs and have excellent connections to London.

“I think people looking for a house or flat, or even a couple to raise a family, would love what’s available in Coulsdon.

“We have a wonderful high street, with independent shops and excellent transport connections. This is why so many people have lived in Coulsdon for years.”

Croydon’s Council Tax Support Scheme is set to undergo more changes, which will not be good news for thousands of households that are facing fuel poverty during this winter’s cost-of-living crisis.

While Council Tax rose in April, approximately 20,000 households living in Croydon were shocked to learn that their Council Tax Support had been reduced, sometimes by as much PS116 per month.

It was part the PS38million budget cuts for 2022-2023 that were imposed on the borough in the wake of the Labour-run council’s financial crash of 2020.

Croydon is now under the Tory Mayor Jason Perry’s control and has announced a consultation on any further changes to its Council Tax Support Scheme.

According to the propaganda section of the council, “The proposed changes include the removal of the self-employed minimum income requirements currently applicable to households where the claimant is disabled or their partner.”

“Other modifications include reviewing the amount Council Tax support provided households of disabled residents where other adults are in the house.” reviewing means that the council is cutting.

“This change is in accordance with the principle that every household should contribute to Council Tax.”

“The council also proposes to adjust its income bands to match any increase of Council Tax.” The cash-strapped council will make the maximum 5per cent increase , which is the limit for any year. This will happen as Croydon deals the Newman and Negrini mess.

The Mayor Perry’s puppets at the council cabinet meeting last night rubber-stamped the six-week consultation process.

“It is important that we are reviewing them to ensure any new measures are fair, consistent,” stated the part-time mayor who receives PS81,000 annually.

You can find all the benefits offered by the council on its website.

It was a great year 2021! We came out of one variant and headed into another. Talk of further lockdowns followed. The first time in three years that the interest rate rose was officially announced a few weeks back . To curb inflation, more rate hikes are expected this year. The stamp tax holiday was a success because it kept property transactions buoyant but also contributed to the current inflation. After a few years of hard times, the London rental marketplace appears to be making some progress. This happened despite the fact that there is a healthy rental market elsewhere.

What are the 2022 predictions?

Inflation is likely to remain an issue as many countries struggle to deal with the supply shortages that were largely caused by the pandemic. Inflation was measured by the Consumer Prices Index (CPI), and it rose 5.1% between November 2021 and November 2021. This is one of the biggest increases in the past 20 years. It means that interest rates will continue to rise to reduce inflation. According to the Office of Budget Responsibility (OBR), rates could rise as high as 3.5% in 2023, which is worrying considering that the current rate of 0.25% is it. This is likely to signal the end of an era of record low interest rates.

Rightmove anticipates that the housing market will be more balanced between buyers and sellers in 2021 than in 2021. The lack of housing stock was a major reason for price inflation. Rightmove predicts house prices to rise by 5% nationally this year, but it is difficult to argue with the fact that the fundamental numbers remain strong. The number of homeowners requesting to have their homes valued by estate agents rose 19% compared to the same time last year. The November data also shows that buyer numbers are up 41% over 2019 and 3% over 2020.

We will not know how the market will develop until the government clarifies how long it will allow people to work remotely (for those who are able), or if there are any additional restrictions in January/February. At the time this article was written talks of an end to restrictions.

Manchester is still a strong region for growth in 2022. Birmingham is expected to be a major winner, mainly due to its hosting of the Commonwealth Games 2022 and the HS2 Project.

Rob Dix and Rob Bence from The Property Podcast suggest that Nottingham, Liverpool Derby, and Manchester are the best areas to invest in the UK in 2022.

They then make bold predictions about property prices rising between 6-8%, which is higher than any other official predictions such as the Rightmove prediction. They expect London’s market to grow by only 4%. For more information, visit their podcast.

Making predictions is fun. No one can predict the future with any certainty. However, getting the opinions of many experts in the industry about what’s likely for 2022 will keep your informed and help you to take action if necessary.