This time last year the message from the moving industry was “everything’s fine, 2023 will be fine”.
For movers, whether you were buying or selling (and even ignoring prices) 2023 was the most difficult year for moving home in recent memory as transaction volumes reduced and lending tightened, with lenders making many more down-valuations on homes than usual.
We enter 2024 with the economy flatlining. Glimmers of hope that “the worst is over” and “we’re at or near the bottom” trickle out with questionable sincerity from the moving industry as they attempt to activate more buyers.
Election uncertainty looms. Mortgage lenders are fighting each other over the measly scraps of new business available. New homes builders are offering everything including the kitchen sink to anyone brave enough to pay their asking prices, while construction activity grinds to a halt as demand dries up.
We are in the grip of a housing market activity downturn that may, eventually, turn out to be one of the worst in living memory, because there is no sign anywhere on the horizon of the economic prosperity essential to any pickup in housing activity.
Real wages, in the real world, have not risen fast enough to offset the true cost of living increase and the UK.
Those who “must move” will continue their struggle through the dysfunctionally slow and painful moving process. A diminished number of brave first time buyers, many ignoring the risks of negative equity, persist in their dream of home-ownership above all.
But the biggest factor of all is the way the “average” house price is being confusingly reported as though it bears any relation to what’s happening with actual house prices. Small, single digit, year on year price falls appear in across the board, with some showing recent ‘increases’.
The most important thing movers need to know about house price indices, is that a change in the “average” transaction value can be different to what is happening to actual underlying house prices.
For example, if there are fewer than average transactions at lower-than-average price levels (which we know to be the case from BoE mortgage approval figures), this causes the “average transaction value” to increase, but not because house prices have risen.
Similarly, if there are more than the typical number of transaction at higher-than-average price levels, then even if these houses are selling at lower prices, the increase in volume will make the “average transaction value” rise.
There is plenty of evidence to suggest both of these two things are happening, not only from BoE mortgage approval figures, but also from Rightmove showing that asking prices at the “top of the ladder” have fallen much further than anywhere else, indicating a significant increase in sellers at the top, arguably hit harder than anyone else by rising mortgage rates.
If that’s the case, then the “average transaction value” is masking true price movements, which can be seen to be falling locally in most places, especially at higher values.
My “expectation” for the 2024 housing market is this: it’s going to get worse before it gets better. The mexican standoff on price will eventually crumble, as sellers finally reconcile the difference between reality and what House Price Indexes are telling them.
There will be an all-new, community-sourced House Price Index of actual exchange prices emerging during 2024 from the website bestagent.co.uk with the express intention of vanquishing the clouds of guff surrounding the housing market, and bringing the transparency it so desperately needs.
As for house prices? Whatever the “national, weighted, seasonally adjusted, hedonically regressed, estimates” try to tell you, the reality for movers will be an even harder market for sellers, and increasingly attractive opportunities for buyers, as more forced sellers appear while buyers keep tightening their belts.
When is the best time to buy? When you need a home and have found one you can comfortably afford without overpaying. Fortune favours the prepared. If you need a home, be out viewing potential homes. 2024 agents will be more receptive to viewing requests than usual. If you need to sell, don’t make the endlessly-repeated mistake of overvaluing in the hope of finding one buyer who falls in love enough with your unique home to throw caution to the wind and overpay for it. Price is more competitively than similar local homes (ie below the asking price of similar homes actually selling) and allow the market to do its thing: competing buyers showing you their highest bid.