We often get asked what is going to happen to local house prices.

Many things affect house prices, and it comes down to simple supply and demand.

On the supply side of the equation, in the short term, the number of people wanting to sell their property at any one time has a massive effect on house prices.

In 2007, the number of properties that came onto the market in TQ13 jumped drastically. In January 2007, 34 properties were available for sale in TQ13 and by October of the same year, that had risen to 75 properties.

This flooded the local market with houses to buy whilst, at the same time, the banks almost stopped lending money because of the Credit Crunch, thus causing the house price crash of 2008.

Also, on the supply side of the equation is the total number of houses in the whole country (irrespective of whether they are on the market or not). This is an essential factor in house prices, although that has a longer-term effect. Governments can control the number of properties being built with changes in planning regulations, incentives for builders, and the buyer schemes such as the Help to Buy plan.

On the demand side of the equation, property values typically rise if homeowners believe they will be wealthier in the future.

This often occurs when the whole country’s economy is performing well as more Brits are at work and salaries are higher. The opposite is also the case when the economy goes into recession; people tighten their spending, lose their jobs, and thus, house prices drop. Inflation will affect British household budgets (because if more of the household budget is going on increased bills, there is less available for mortgage payments).

Another factor on the demand side for housing is when the population increases (through people living longer or increasing net migration) or when the divorce rate increases (making one family household into two single-person households). As always, rising demand typically means higher house prices.

One aspect of the demand side of housing that the Government can control is the taxation of moving home. In the late spring of 2020, the Government vastly reduced the tax (Stamp Duty) paid to buy a house, saving many home buyers thousands of pounds.

Also, on the demand side, property values usually increase if more homebuyers can borrow more money with a mortgage to buy their home.

The more banks and building societies can offer mortgages, the more homebuyers can buy their future home, thus raising house prices.

However, the constraint is the amount a home buyer can borrow on a mortgage.

What someone can borrow depends on what they earn and if they can afford the monthly mortgage payments. The level of mortgage payments is dependent on three things.

1.     How much you borrow

2.     The interest rate charged

3.     The length of the mortgage

The lower the interest rates are, the lower the cost of borrowing to pay for your house is and thus more people can afford to borrow money with a mortgage to buy a home, meaning house prices tend to go up.

TQ13 house prices have risen by 69.46% between 2010 and today, mainly fuelled by low-interest rates.

So, looking at everything above, apart from Stamp Duty and the incentives for buyers (which historically have made a minimal difference), the Government in the short-term, irrespective of who the Prime Minister is, makes little difference directly to house prices.

The most significant short-term factor which directly affects house prices is interest rates.

However, the Bank of England (not the Government) sets the interest rate for the UK economy. That means the Government (and Rishi as PM) cannot directly make any differences in house prices (apart from the points raised above).

Yet, indirectly, as seen with the Liz Truss / Kwasi Kwarteng Mini-Budget catastrophe only a few weeks ago, what the Prime Minister (and their Government) does can make a massive difference to interest rates and, thus, the property market and house prices.

Since December 2021, the Bank of England has been slowly raising interest rates to combat inflation. Unfortunately, the downside is that it increases the mortgage rates homebuyers must pay if they are on a variable-rate mortgage or coming off a fixed-rate deal secured a few years ago.

As 17 out of 20 homebuyers have a fixed-rate mortgage, when a bank or building society calculates a 5-year or 10-year fixed-rate deal, they consider what the Bank of England interest rate is today, but they also consider something equally important, something called the 'swap rate'.

As a local homeowner and landlord, it is vital you should be aware of the swap rates as they are based on what the global money markets think future UK interest rates will be.

If the swap rate rises, then mortgage lenders will increase their rates on the mortgages they offer, and by doing so, (as discussed previously in this article), increased mortgage rates will affect affordability and, thus, house prices.

So, what affects UK swap rates? Mainly one thing, the price of government debt in the form of gilt yields.

Given the vast increase of planned government debt originally announced in that mini-budget by Truss/Kwarteng, the money markets who would be lending the Government the billions of pounds to fund those tax cuts got worried the Government wouldn’t be able to pay back such a rise in borrowing, so wanted a higher rate of return on the money they were lending the Government. 

That return is measured in the 'gilt yield rate', and the gilt yield rate directly drives the 'swap rate.'

That rise in the gilt yield rate/swap rate was the main reason mortgage rates rocketed after the mini-budget and helped in the collapse of Liz Truss's Prime Ministership.

So, what can local homeowners expect in the coming weeks and months with gilt/swap rates?

Rishi Sunak’s first job was to re-establish confidence in the money markets for UK plc. During the summer, the 5-year gilt rate rose steadily from 1.6% to 3.5%, in line with the general rise in Bank of England base rates. Yet when the mini-budget was delivered on the 23^rd of September 2022, that rose almost straight away to 4.6%.

That meant every mortgage rate jumped in price by 1 to 1.5% almost overnight.

At the time of writing, the 5-year British gilt yield has dropped to 3.5%, and the others have either dropped below their pre-mini-budget rate or were moving in that direction, depending on the gilt type.

The gilt rate (which directly affects the swap rate, which in turn, directly affects mortgage interest rates) could drop further, subject to what Rishi Sunak and his Chancellor Jeremy Hunt have planned in the budget (and supplementary report from the Office for Budget Responsibility) on the 17th of November 2022.

A drop in the gilt/swap rate is vital for any TQ13 homebuyer buying a house or local homeowner re-mortgaging to a new mortgage deal. Why? Because...

with the average TQ13 home worth £345,293 (a rise of 3.5% over the past year), each 1% extra in the mortgage rate would cost every local homeowner an additional £287.74 per month.

So, what does this all mean for local house prices, then?

Greater certainty will keep the volume of housing transactions ticking over, yet not inescapably TQ13 house prices.

In my recent blog articles on the local property market, I believe TQ13 house prices will be lower in 12 months, and I expect these prices to return to where they were in the late spring/early summer of 2021, in the not too distant future.

And why is that? Unlike the 2008 Credit Crunch house price crash, today, the country has very low levels of unemployment and very well-capitalised banks (because the Bank of England subsequently forced them to keep lots of cash in their banks to cover downturns). Therefore, I don’t anticipate the kind of double-digit house price decreases seen 14 years ago.

If you would like to pick my brains about the local property market, be you a potential first-time buyer, a local homeowner looking at your options on re-mortgaging or selling, or, in fact, anyone with questions, don't hesitate to drop me a line. I will gladly share my thoughts and opinions without cost or obligation.

Best wishes

Katie

FINDING YOUR FOREVER HOME

House hunting can be tricky at the best of times. There are so many things to consider when looking to buy your ‘forever home’, there will be so many questions in your mind such as “is there enough space for everybody? Can we make it our own? Does it have all the restaurants, bars, amenities and entertainment I might need close by?”.

Choosing your forever home can be overwhelming, but so exciting. To help you on your search, here are our top tips for finding your ideal forever home.

BEGIN WITH THE END IN MIND

When you’re thinking about your forever home it’s a good idea to start with the end in mind. If this really is your forever home, purchase one with a floor plan that allows for growth and flexibility. Think wedding bells, nurseries, home offices, extensions etc.

BUDGET

Having a budget in mind will allow you to search for homes, but depending on what you find, it’s always important to keep money aside for sprucing up the interior and for future extensions. It gives you a good guideline as to what you can realistically afford and what you need to compromise on. Don't stretch so far that it impacts your lifestyle. 

LOCATION

Usually, the first aspect a homebuyer will consider when finding a ‘forever home’ is the location. Make sure the location is ideal for you. Location will impact your day-to-day life. School runs, supermarkets, walks, commutes, employment opportunities etc. Whether the home is within a town near restaurants and shops—or in a quiet village with only a few local shops close by—if you love the location, then this is a huge plus. 

Decide which location features are non-negotiable, such as good accessibility to public transport links.

THE FIXTURES AND FITTINGS ARE UP TO DATE

It can be a challenge to move into a new home that needs repairs. You can expect to put your own stamp on properties cosmetically but if you're not looking to replace a kitchen or a bathroom any time soon then make sure everything is in order in this respect.  

SCOPE FOR EXTENSION

It’s also a good idea to consider if the property has potential to be extended in the future, providing you with further space that will help to raise the value of your home. Increasing the space in your home with an extension can be a great investment for your family.  It is worth looking into the legal jargon to make sure it can be legally extended and dimensions for any potential works before saying yes, so you can have an idea of what you can do with the property in future.

YOU CAN ENVISAGE YOUR FUTURE THERE

When you’re standing in the bedroom, can you see yourself waking up there? Can you imagine yourself coming back there after your honeymoon, preparing your kids for their first day in school? 

UNDERSTAND THE DIFFERENCE BETWEEN YOUR WANTS & NEEDS

It’s a good idea to make two lists – wants / needs. Your wants should be the things you don’t want to compromise, and the needs should be the things you simply can’t compromise on. Finding a balance between the two lists will eliminate the possibility of buyer’s remorse down the track. Homeowners are constantly changing their homes, so it’s unrealistic to think you’re going to find something perfect right away.

FEELING AT HOME

Your gut feeling is always there isn't it. You will know if a property feels right or not or if you're unsure. If you're unsure, go back to your future goals and what your needs are in a home.  

CONTACT US

Get in touch today to help find your forever home with us. We are here to help guide you all along the way to ensure you find your ideal forever home. If you've been considering making a move, now might be a good time. Just get in touch and we will be here to help. SImply email katie@sawdyeandharris.co.uk or give us a call on 01364 652652.

Looking at the newspapers with their doom and gloom headlines, you would think that the local property market (and the British property market) would be on its knees.

Yet ring some of the local Estate Agents for a viewing or free valuation, and if you can get an appointment within a week to ten days, you are doing well!

British properties continue to sell in good numbers.

In July and August 2022, sales have been agreed on an average of 25,476 UK properties per week.

Interesting when compared to the averages of 27,351 sales agreed per week in 2021 and 26,382 sales agreed per week year to date in 2022.

So why is the Dartmoor and Teign Valley property market defying all expectations?

It is because there is an absolute shortage of properties to buy on the books of estate agents, meaning local house prices are being kept buoyant (as demand exceeds supply)

Today, there are 34 properties available to buy in in TQ13. Roll the clock back to October 2007, the month before the last house price crash, and it was 34

That’s 0% fewer properties to buy today in TQ13 than the month before the property crash.

Notwithstanding suggestions that the Bank of England’s higher interest rates would peter out British house price growth, the continued limited supply of properties coming onto the market has helped Dartmoor and Teign Valley house prices climb.

TQ13 house prices are 18.6% higher today than a year ago.

Nevertheless, there is evidence that the insane demand for property has started to ease, and supply is increasing, which means that the direction of the TQ13 housing market is beginning to change in the coming months.

This can be seen in several ways.

Back in January and February (2022), 8,094 UK properties per week were reducing their asking prices, whilst this July and August had risen to an average of 13,115 UK properties per week. This is significant as some 'optimistic' homeowners who placed their properties on the market in the Spring and early Summer have had to reduce their 'optimistic’ asking prices to attract buyers.

Also, the number of UK house sales falling through (i.e. when the sale is agreed yet the sale falls through before the legal paperwork is completed) is starting to creep upwards from an average of 5,558 properties a week in the Spring of 2022 to 6,854 per week in July and August 2022.

Local house prices have risen over recent times; the most recent figures are based on what was selling in the late Winter /early Spring of this year and subsequently completing the sale in the early Summer.

The prices obtained by the Estate Agents on properties achieving a sale in TQ13 today (i.e. in the Autumn of 2022) are slightly lower than what was obtained nine months ago. This means the house statistics published in early Spring 2023 will slightly reduce. Nothing to worry about – I want to give you a heads up and not to be concerned. The simple fact is

We are returning to a more normal housing market this Autumn, compared to the crazy last 30 months since the end of lockdown one.

With UK inflation standing at 9.9%, this brings an interesting scenario for local property values.

Reducing ‘real’ wages will hit first-time buyers and existing homeowners’ disposable income, while the same high inflation will make the Bank of England increase interest rates.

These things will significantly reduce homebuyers' capacity to afford their mortgages as the fewer people who can take out a mortgage; the fewer buyers will buy homes.

The Bank of England base rate currently stands at 2.25%, yet forecasts suggest it could end the year between 2.75% and 3%. Yet lets us not forget the long-term average over the last 50 years has been between 7.1% and 7.2%, and many mature homeowners will remember Bank of England Base Rates of 17% in 1979, so these sorts of increases are still off a low base.

During these Autumn months, though, the lack of properties on the market and available to buy still support TQ13 house prices. The newspapers compete for attention and use Clickbait titles to generate more interest in the publications.

The simple fact is that unless something seismically happens in the world to change things materially, the Dartmoor, Teign Valley and British property markets will continue to harden slowly and will face some different challenges compared to the last 30 months, but fundamentally TQ13 house prices will remain broadly neutral over the next 12 to 18 months.

These are my thoughts; what are yours?

When to sell your house is a tough decision and only you will really know when it's the right time. Navigating the turbulent property market, worrying that your home might not sell as well as picking the right finance and packing up your things all might feel like a lot of effort. Is a move really worth all this time and trouble? 

Your home needs to be your sanctuary that you love being in. Somewhere you can relax. Are you starting to get niggling feelings when you're in your home? If so, NOW might be the time to consider a move. 

A stamp duty land tax cut has been announced, effective immediately, so if you have been thinking of selling your home, this might appear to be the right time to do it. 

But what financial and emotional steps do you need to take to get yourself and your home ready for buyers? It is the right time to sell when you have a plan and here are some reasons you might decide NOW is the time to take that leap and move…

1.    You’re Financially Ready to Sell

Make sure you have a clear understanding of your financial position. This will be one of the main factors in deciding whether you're ready to sell. It will also help you develop a plan after the sale, and where you’ll be able to go next. 

2.    You want a change of scenery

Change can be a good thing. There are many reasons you may want or need a change – whether it is because you’ve outgrown your current place or are ready for a new location, you need to move closer to your children's school, new relationship, there’s an abundance of reasons why it may be time to move on. 

3.    Being emotionally detached from your home

It is tough working with a seller who is still emotionally invested in their home and that makes it even harder for your home to sell. You don’t have to remove the sentimental value from your home in order to sell it, just don’t allow it to influence your decision-making process. If it does then you may not be ready, which is ok! Being one hundred percent committed to the sale of your home is important before you undergo the process. 

4.    You’ve Outgrown Your House

Outgrowing your house is typical for first time buyers, and young families. It is time to find a home that can fit everyone. If your family is growing, if you're working from home and you need more space, there is a good chance you want to sell your house.

5.    LAST BUT NOT LEAST - STAMP DUTY CUT

If you have been thinking of moving, now is the time to save on Stamp Duty!

Following the Chancellor’s announcement, houses that cost £250,000 or less are exempt from stamp duty. First time buyers will only pay stamp duty on properties that cost more than £425,000. This change came into effect from the 23rd of September 2022, so this saving is here right now. 

If you’ve been waiting for a change in the market, if you’re a landlord considering opportunities for your portfolio, or if you’ve been considering making a move, now is your chance. Get in touch, and we’ll help you make the most of the stamp duty cut.

 Just get in touch with us by emailing katie@sawdyeandharris.co.uk or sending us a message through facebook - we are here to help guide your throught the property waters!

Traditionally, Spring is a seen as a favourite time to sell your home. However, there are other months where it is equally as good a time to sell – September being one of them. Especially for those up-sizers; those looking (usually families) to buy a larger home or first time movers/sellers.

Family buyers tend to buy in autumn, spring and early summer....term times! Those with children typically don't want to house hunt during the holidays for a couple of reasons: firstly, they might be preoccupied with lazing in the summer sunshine, or going away on holiday and secondly, who wants to view a home when you have bored children to contend with? It just adds to the initial stress already there with viewing a house! So, parents tend to wait until the schools are back open and they can carry out viewings in a more relaxed fashion. 

Furthermore, when the sun is out, a lot of time is spent in the garden so up-sizers won't feel as squeezed for space and consequently, the move doesn't feel as urgent. So, it might be that there are fewer house hunters in September and October but, they tend to be keener and make an early decision so that they can be moved in and settled by Christmas. 

So why might September be the best time for you to sell your home? Here are our 7 top reasons why not might be the perfect time to get moving:

1. The children are back at school starting a new year and the feeling of change can extend to parents. This attitude shift can often instigate a desire for a new start in other areas of life, with a property move high on the list. 

2. The 'C' word...Nobody wants to talk about Christmas in September BUT buyers looking at property at this time of year are usually keen – they probably have plans to have moved into their new home for Christmas, and this excitement keeps them on track. With this in mind, it’s always best to get your property listed as early in the season as possible.

3.  If you have a family, having the children out of the house during the day means you will find it easier to keep it tidy for viewings. We have all been there during the school holidays where you feel like a bomb has hit your house, you tidy one room and turn to the other and wonder why you bother! Having a tidy home certainly takes some of the stress away of someone coming to view your home. 

4. Setting the 'stage' for potential buyers is crucial in making the right impression. This is why September represents an excellent time to sell your house. Your home looks warm and cosy, with lamps lit, the fire on and the glimmer of the lit candles.  It is the most beautiful with its warm and inviting colours, cosy fires and exciting atmosphere of the festivities that lie ahead. A ‘twilight’ image at this time of year can really show your home at its best.

5.  With the darker nights and colder days, people spend much more time inside their homes than what they do in summer. This changes the lifestyle and perspective of homeowners, which influences their decision in what they want from their home. Simple things such as the lack of daylight can create the illusion of a smaller space and trigger the need to upsize. One of our previous blog posts might be worth reading to help you style your home - How to add thousands to your home with our pro styling tips - Blog (sawdyeandharris.co.uk)

6. Because the schools have gone back, parents are free to view homes child-free. That means they are more relaxed, less hurried, and in a better frame of mind to make a decision.

7. Your garden still looks lovely, and as the leaves start to drop, views often improve. Get your photographs carried out whilst the sun is still shining to capture your home at its best.  You can read one of previous blog posts on getting your garden ready for sale - Style Your Garden to Sell in 6 Easy Steps - Blog (sawdyeandharris.co.uk)

Interested to know MORE about the property market ? Or do you need other advice on how to prepare your home ready to go on the market? Either way, we’d love to hear from you! Simply call us for a chat on 01364 652652 or send us an email at katie@sawdyeandharris.co.uk. No matter what your question is, we’re always more than happy to help