House prices are still rising at a rate of knots, but some brokers say the signs of a slowdown are already there.
Look at the numbers and real estate inflation is rampant: This week, Nationwide said house prices were up 11 percent in the year to July.
That is even higher than consumer price inflation behind the cost of living crisis, for which the ONS last reading for June was 9.4 percent.
But while it may seem surprising that house prices are still rising in the face of a dramatic escalation in mortgage costs – as interest rates are raised to fight well above target inflation – the market is said to have already picked up steam.
Rocket man: House prices have skyrocketed during the pandemic boom, reaching new highs after new highs, but some say the market is spiraling out of control
Alongside the Nationwide numbers came some comments from brokers who said the market had softened.
There was of course no doom and gloom, just talk of a soft pressure drop, but keep in mind this is a fairly bearish outlook for this traditionally bullish profession.
These views are just snapshots of what’s happening, but it’s worth keeping an eye on in a market where measuring changes in direction is much more difficult than somewhere where it’s easy to track, such as the stock market.
And when it comes to the real estate market, it’s not just the big house price reports that you should be looking at, it’s also worth keeping an eye on what’s happening in your area or where you’re looking to buy.
This will be a guide to what’s most relevant to you: whether it’s a passive interest whether your home has risen or fallen in value, or an active interest whether you can afford to buy or move a house.
While reports on the house price index make headlines, they don’t give the best indication of what’s happening.
The average UK home they track is a construction and not a representation of something that actually exists: the average home in my area is different from the one in your area.
Meanwhile, the overall UK property market is made up of many different individual pockets that don’t always mix.
In a broad sense, it can be spoken of as the North-South divide, London versus the rest, the commuter belt versus the regions, or in many other ways.
But in a narrow sense, you can make markets in two places close to each other behave differently. The towns where I live in Hertfordshire, for example, often don’t take the same course as nearby Luton.
Looking at where you live will not give you the full picture of what is happening in the UK property market, but it will give you a good idea of what is happening in the places where it matters to you.
Depending on how interested you are – and I admit I’m a bit of a real estate nerd here – you can keep an eye on asking prices, which places are selling, and how much or little is hitting the market.
But there’s one more tip I’d give: If you really want to gauge the temperature of a local real estate market, look at what isn’t selling.
Looking at what’s selling and what’s not is the best guide to real estate sentiment and where it can go
This is something that we armchair anecdotes can do, but home price indices can’t because they are based on sales prices, asking prices, mortgage completion numbers, etc.
But looking at what’s selling and what’s not is the best guide to real estate sentiment and where to go.
If you think ‘that’s a crazy price’ and things are still selling, the market is going great.
When you see houses coming up for sale for more than the last batch and think ‘how much?’ and they are still selling, the market is doing well.
But when you start to see only some of the better expensive stuff being sold and then shifting to only what seems reasonably priced for its under-supplied attributes, you can see the heat coming out.
When the reduced labels hit Rightmove en masse, you know it’s definitely on the slide.
And you can tell a market is really in trouble when houses start to look like a good value and still aren’t selling.
In that regard, we moved from the first and second scenario above to the third from my property near me.
The market is still in good shape, but it is off the boil compared to the madness of the pandemic boom.
That’s to be expected: Mortgage rates have skyrocketed since the start of the year, with the average five-year fix rising from 1.55 percent to 3.5 percent, potentially adding hundreds of pounds to the monthly cost of buying a home. the same house.
Ultimately, this will have an effect and you can calculate how much it would cost you with our best mortgage interest comparator.
A hint of slowdown also emerged in the Nationwide report, with the building association saying that while cash buyers remained strong, mortgage buyers had slipped more since the stamp duty holiday ended.
I expect this trend to continue as the rapid escalation in mortgage rates continues.
So maybe it’s worth looking at who isn’t buying and what isn’t selling.
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