Wharf Life's Property Supplement, Aug 23-Sept 6, 2023

Latest House Price Index points to asking price cuts and weak demand as reasons why it’s saying property prices will continue to drop

why Zoopla believes that prices will fall 5% this year

by Jon Massey

Property portal Zoopla says the prices achieved by sellers over the course of this year put the housing market on course to fall by an average of 5% across the UK by the end of December. While this figure appears bleak, this would still leave prices 15% higher than at the start of 2020 before the pandemic hit.

The organisation’s monthly House Price Index report put the expected falls down to the ongoing rise in interest rates as the Bank Of England attempts to head off inflation.

It said prices began to fall at the end of last year when interest on five-year fixed rate mortgages rose to 5.5% for a benchmark 75% loan-to-value.

However, it also pointed out that these falls had started to reverse when mortgage rates fell back to 4% suggesting that lenders’ prices are directly linked to the value of property.

Zoopla said it now expected the price fall to be sustained even if rates fell back before the end of the year due to weak demand.

The picture across the country is mixed, however. While prices in London and the south of England are showing the largest falls, values in the capital are not dropping as rapidly as might be expected, with the portal putting this down to a lack of growth over the pandemic.

In July, for example, prices in London

as rates so do rents

by Jon Massey

Inflation looks to be finally falling at a significant rate and some mortgage lenders are dropping their rates – HSBC, for example, has already trimmed 0.35% off some deals with a £500 bonus for sign ups. Surveyors, however, think that celebrating what appears to be positive news for the housing market may be premature.

The Royal Institution Of Chartered Surveyors (RICS) recently released its monthly residential market survey, which makes for less than optimistic reading.

were only 0.6% down on last year in contrast to Cambridge, which saw a 0.9% fall and Aberdeen, which dropped by 1.6%.

Nationally the average house price was 0.6% up year-on-year in July with some more affordable areas seeing prices continue to increase. However, it should be noted that this is in stark contrast to the house price inflation 12 months ago, which stood at 9.6%.

Zoopla said high mortgage rates equated to an extra barrier to first-timebuyers getting a foot on the ladder, which was having a knock-on effect across the market.

It also found that while its predictions and calculations were based on prices achieved for properties in completed transactions, asking prices were also being cut more by buyers with figures slashed by an average of 6.7%.

It said this figure was 60% above the five-year average, with the measure now back at the level it reached in 2022 and was a contributing factor in its forecast that achieved prices will continue to drop over the course of the rest of 2023. Go to zoopla.co.uk for more or to read the report in full

Scan this code for more about Zoopla’s house price index

In short, its members across the country reported declines in sales volumes and new buyer enquiries, were more pessimistic in July about house price growth than they were in June and expected a further fall in property values over the coming year.

Indeed, the picture in its July survey saw a net balance of -49% of contributors to the report were anticipating this, a significant change from May when it was -3% prior to the most recent shift on interest rates.

Obviously there is some lag in the data, but the Bank Of England’s decision to raise rates again in August suggests the possibility of prolonged sluggishness in the market.

Naturally, when the sales market slows, the rental market tends to improve and RICS members were bullish in reporting a rise in tenant demand and forecasting price growth.

A net balance of +54% of respondents reported a rise in the number of people looking to rent a home in the UK, with a net balance of +63% expecting the cost of doing so to increase over the next three months. This in itself was a rise from +53% in June.

The continued weak reading for the new buyer enquiries metric is indicative of the challenges facing prospective purchasers

Simon Rubinsohn,

Broadly speaking, the pattern in London follows the national picture, with surveyors predicting price falls in the sales market and price rises for rentals. RICS report said the latter was due to the lack of property available for rent in the face of increasing demand.

RICS chief economist Simon Rubinsohn said: “The recent uptick in mortgage activity looks likely to be reversed over the coming months if the feedback in this latest residential survey is anything to go by.

“The continued weak reading for the new buyer enquiries metric is indicative of the challenges facing prospective purchasers against a backdrop of economic uncertainty, rising interest rates and a tougher credit environment.

“Just as concerning are the insights being provided around the lettings markets. Demand shows no signs of letting up, supply remains constrained and that means rents are likely to continue rising sharply despite the cost-of-living crisis.”

Go to rics.org for more information

Scan this code to read RICS report in full

how RICS members predict further price falls in the sales market while rental prices continue to increase

RICS

£500

Cash back HSBC is offering prospective buyers as an incentive on some of its mortgage products, having also cut rates by 0.35%

A majority of surveyors are still expecting house prices to fall over the coming year

Bedrooms and three bathrooms, plus an extra WC, are to be found within this period conversion

contact

Hamptons on 020 7346 5801 or email canarywharf@hamptons.co.uk for more about this property or similar homes on the agency’s books

how Locksley Street offers a chance to live in a converted East End public house

PROPERTY FACTFILE

Locksley Street, E14

Guide: £1million-£1.2million - leasehold - EPC Exempt l Bedrooms - 3 l Bathrooms - 3 l Reception - 1

This property occupies the ground floor and basement levels of what was formerly the Prince Alfred pub in Limehouse on the corner of Locksley Street and Clemence Street beside Mile End Park South.

Entry is via the upper floor, which houses the main bedroom, its en suite shower room and a second bedroom plus a family bathroom. Downstairs there’s a double height living area with a fully fitted kitchen, a dining area and a lounge space.

The property also boasts a small home office and a further bathroom as well as a fourth WC and a utility area in addition to a third bedroom and plenty of built-in storage.

Built in the late 1800s before being recently refurbished in a modern, minimalist style, the property offers a wealth of flexible space as well as a private outdoor area.

The home is located within walking distance of Limehouse station for the DLR and C2C rail services and is also close to Burdett Road, which is wellserved by bus routes. The home is also located close to the Limehouse Cut and Regent’s Canal, offering access to a multitude of destinations by bike. Go to hamptons.co.uk for more information

Scan this code to find out more about this property, see more images and explore a floorplan of the apartment’s layout

The maisonette comes with a home office space

The property is located in Limehouse

the expert view

Here’s a chance to own a rare piece of local history with this former public house now converted into a spectacular 1,800sq ft apartment ready for modern day living.

For those who need a little extra space, this high spec property comes with a versatile layout which includes three large double bedrooms, a home office room and a spectacular open-plan kitchen and living space with impressive, double height ceilings, all designed with entertaining in mind. This unusual property comes with a private terrace area and off street parking.

Service charges are estimated at under £4,000 per year, making this an attractively affordable option for buyers.

Adam Wolfryd is associate director and head of sales at Hamptons in Canary Wharf

Go to hamptons.co.uk or follow @canarywolfy on Instagram

The property makes use of the former pub’s cellar as its main living space