Andy Sommerville
, Director at Search Acumen, the property data and insight provider, comments:
“Today’s data is further evidence of a turning tide for house prices, reflecting the same pattern of declining growth we have started to see emerge over the last two months. As the impacts of previous rate rises and inflation filter through into house prices over coming months, we’d expect to see further declines coming down the tracks.
“Homeowners will naturally be concerned about what this means for them but can take comfort from the government’s return to more traditional economic approach, which is likely to continue to stabilise the mortgage markets. The Bank of England indicated last week that a continued rapid ratcheting up of the base rate in 2023 would be unlikely, so this suggests that fears around runaway mortgage rates creating a demand cliff edge will not now come to pass, protecting homeowners from more severe declines in asset values.
“While demand will likely decline further as we enter a period defined by a painful combination of recession and high inflation, pressure on existing property transactions will only increase. If a forecast peak-to-trough 8% dip in prices becomes a reality over the coming year, lenders and selling agents will be under pressure to push sales through quickly or risk down valuations, renegotiations and fall throughs.
“This is happening at the same time as we anticipate significant spending cuts to already over-stretched government departments. In the housing market, this could mean further delays in processing property transactions which are already massively backlogged, making the stakes much higher and increasing transaction costs at a time when people can least afford it, especially sellers who might already be taking a hit on their valuation.
“Given these pressures, how the market fares in the months ahead will be defined by how well it learns the lessons of the pandemic and continues to invest in innovation as a tool for efficiency and cost saving in challenging times. We already have the technology to digitise property data and automate the transaction process through AI, taking tasks that took weeks and cost thousands of pounds, and delivering them in seconds for half the price. As Britain’s recession becomes reality, now more than ever the property sector needs to embrace technology to future-proof businesses, keep markets moving, and support everyday buyers and sellers facing significant financial pressures.”
