Home Real Estate ‘Kicking myself I didn’t move faster’: fear and panic grips housing market | Housing market

‘Kicking myself I didn’t move faster’: fear and panic grips housing market | Housing market

by Ozva Admin

The phone has almost stopped ringing at the Mullucks estate agent in Bishop’s Stortford, except for calls from buyers with bad news about the chains collapsing.

Since Chancellor Kwasi Kwarteng’s mini-budget two weeks ago, a chill has swept through the property market in the suburban Hertfordshire town. Display numbers, home prices and customer confidence are rapidly cooling after lenders took out thousands of mortgage deals, only to return with much higher interest rates.

So far this month, Mullucks has had just 20 visits, down from 232 for all of September, as the crucial fall sales season threatens to fade away with a groan.

A buyer called the office on Wednesday morning to say that the mortgage he had been offered would now cost £3,000 a month, much more than his original listing, meaning he would no longer be able to afford the house he was interested in, says William Wells, Residential Director of Sales.

“The result is that your money doesn’t go as far. People say, ‘I was hoping I could buy that, but now it’s not available.’ They have to set their sights lower,” says Wells, a four-decade veteran of the real estate business.

Wells expects the total number of views in October to be down 50% compared to the previous month. “That’s a pretty significant drop,” she adds.

Good schools, large Victorian and Edwardian houses and fast connections to London (the train to Liverpool Street takes 40 minutes) mean that the family homes in Bishop’s Stortford’s often sell for over £1m. Mullucks, owned by the estate agency chain Hunters, also caters to first-time buyers who are relocating from London but don’t want to be too far from the capital.

Bishop's Stortford has grand Victorian and Edwardian houses and fast connections to London.
Bishop’s Stortford has grand Victorian and Edwardian houses and fast connections to London. Photograph: Antonio Olmos/The Observer

The city’s market, which the estate agent describes as “up” was a hot spot for those moving out of the capital looking for more space during the pandemic, a trend that has continued as many people have moved permanently moved to working from home.

Newly built tower blocks are springing up around the station to meet that demand. However, the turmoil brewing in the housing market threatens to stall that growth.

A new housing development in Bishop's Stortford.
A new housing development in Bishop’s Stortford. Photograph: Antonio Olmos/The Observer

The average rate on a new two-year fixed mortgage has exceeded 6% for the first time since 2008, according to the latest data from Moneyfacts. The average increased from 4.74% on September 23, the day of the mini-budget. At the beginning of December last year it was 2.34%.

The higher rates are affecting household income at a time when inflation is 9.9%, close to a 40-year high. For the roughly 300,000 borrowers who exit a fixed-rate deal every three months, and those with variable rates, mortgage costs now eat up a big chunk of income.

Mortgage payments will eat up a huge chunk of people’s income.

Mullucks’ team has already seen those higher rates translate into falling sales prices. In September, the median sales price was 104%, meaning properties were selling 4% above sales price, but this has dropped to 98% month to date, indicating that A decline in house prices has begun.

This trend is reflected throughout the country, with the Halifax latest data showing prices falling 0.1% in September. The bank said the market, which has been nearly flat since June, was now slowing more significantly due to rapidly rising borrowing costs, making property ownership unaffordable for more people.

The median house price in the UK is now £293,835, as the pace of annual growth has slowed for the third consecutive month, from 11.4% in August to 9.9% in September.

“The market has been the strangest market in 24 years, it’s changed,” says real estate agent Martin Nash. Photograph: Martin Godwin/The Guardian

The problem is having a ripple effect on potential sellers who are now being told their home is likely to fetch a lower price and are considering waiting until the market recovers before trying to sell. Those who can’t wait to move risk selling their homes for much less than they were worth a few months ago.

“The market has been the strangest market in 24 years; it’s changed,” says Martin Nash, residential sales manager for Mullucks. His advice to sellers worried about not getting a fair value for their properties is “don’t force the market, let the market find the number.”

“With this market, interest rates, stamp duty and everything else, just put it on [the market’] at the right price. If it’s worth more, you’ll get more,” she adds.

One seller, who asked to remain anonymous, had previously been told his five-bedroom townhouse could be valued at £1.2m; a similar property in the area sold for that amount during the summer. But during a valuation on Wednesday he was told he expected a asking price in the region of £900,000.

“One concern is that I’ve actually missed the market and I know I’m going to be moving out of here in the next five years, so I’m regretting that I didn’t move faster in the summer,” he says. “I am in a relatively lucky position. I don’t have to move, I want to, but I want the best deal for me and my family.”

The tumultuous market has caused uncertainty over whether to sell your home now or wait for a higher appraisal later, meaning you may have to withdraw your offer on another property.

“It must be hell trying to get a mortgage now,” he says, raising concerns there will be a “drop in valuations down the chain.”

This scenario is already taking place in some real estate chains. Wells tells of a buyer whose mortgage offer recently ran out and was later offered a new offer at a much higher rate. In turn, they asked the seller to knock £20,000 off the price to make up the difference, which was accepted.

Delays are common when buying a home, but their length has increased over Wells’ 40 years in the business. It used to take five weeks between agreeing a sale and exchanging contracts, now a 20-week window is normal.

Buyers, sellers and agents find this frustrating during calmer market conditions, but delays are more difficult at a time when an expired mortgage offer could make the subject property unaffordable for the buyer.

“It is a house but it is also a home, you have invested yourself, and [if it falls through] there’s absolutely nothing you can do about it,” says Wells.

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