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No house price crash imminent as market remains ‘robust and resilient’

Written by: Shekina Tuahene
The house price crash that has been predicted in some sections of the media is unlikely to come to pass, according to research from a financial news agency.

According to Bloomberg Intelligence, house sellers achieved 98.9% of their asking price in March, which is down on the 100% figure a year earlier but better than any March numbers prior to 2021.

Additionally, homes listed and sold in March this year reached 99.9% of their asking priced compared to 99% in the same month of 2019.

Iwona Hovenko, real estate analyst at Bloomberg Intelligence, explained: “The very narrow discounts of house prices agreed upon a purchase to those listed could imply a robust and resilient UK housing market, which might suggest a crash can be avoided in the absence of negative shocks.

“Small price concessions versus asking prices may be further reinforced by the limited stock of homes for sale, sellers’ strong finances, as well as realism by both vendors and buyers, which enable the transactions to occur.”

Renters return as first-time buyers

The report added that rapidly increasing rents could deepen first-time buyers’ motivation to buy a home, despite challenges around affordability.

It said that property portals Rightmove and Zoopla, as well as estate agents Hamptons and Halifax, showed that there was “unexpected first-time buyer demand resilience”.

The report said that first-time buyers were increasingly opting for smaller properties or extending the length of their mortgage.

First-time buyers are also turning to cheaper existing homes, as the end of the Help to Buy incentives means new builds can command a 15% to 20% premium. This may have an impact on housebuilder sales.

Hovenko said: “UK first-time buyers have been heavily hit by lenders’ tougher affordability checks, shrinking budgets amid high mortgage rates, still-elevated house prices, despite some evidence of falling prices, as well as falling disposable incomes and rising rents.

“Barratt, Persimmon and Taylor Wimpey all noted a drop in the number of sales to first-time buyers, despite their solid interest, contrasting several reports from Rightmove and Zoopla pointing to first-time buyers, surprisingly, being the most resilient of all buyer groups, driven by a hot rental market that has enabled rents to surge.”

‘Creeping’ mortgage rates could ‘dampen the mood’

The report said that indications of mortgage rates picking up due to “sticky inflation” and “robust wage growth fuel” heightened market expectations that the Bank of England would increase the base rate even further.

It noted that this could “threaten a continued housing-market recovery”.

Hovenko said that housing activity had improved in the first quarter of the year after a “dire” Q4.

She said: “Buyer sentiment has been improving as lenders offered rates near or even below 4% on some of their most-attractive five-year fixed-rate deals. Yet mortgage rates creeping up again may dampen the mood,” she added.

“Still, house-price resilience – as various indices point to prices falling by only 1% to 5% from the 2022 peak – is encouraging, with Rightmove’s asking-price index almost back to its October high.”

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