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Property Market Update
Spring 2023
With the arrival of Spring now upon us, it is a useful time to monitor the health of the property market as activity tends to increase. Forward indicators show an increase of supply compared to demand and prices are now down -4.6% from their pre mini-budget peak last August. Since the last newsletter, interest rates have remained stable despite the Bank of England increasing the base rate by 0.25%. This was expected and we don’t anticipate any great deal of changes to mortgage rates for some time – either decreases or increases.
A greater amount of weight is now being applied by buyers to the energy efficiency of properties. Not only are better rates available for the most efficient homes but if the rating is too low, lenders may not agree to lend on it at all. Furthermore, any property that is to be rented out from 2025 (2028 for existing tenancies) much have a rating of at least C. This adds an additional headwind to Buy to Let investors in addition to the reduction of the Capital Gains Tax allowance that was announced in the Spring Budget and already implemented with the start of the new tax year.
We have seen an increase in enquiries for ‘Modern’ Auctions which are a relatively new method of transacting property. It is a joint approach between Estate Agents and Auctioneers with the objective of selling a property quickly while providing a degree of certainty for the seller that the transaction will complete. Unlike normal Auctions where the majority of lots are purchased by investors and developers, Modern Auctions seem to be targeting homeowners and first-time buyers.
We believe one of the primary reasons for this new approach is because of the interest rate increases last year and the number of buyers that were forced to pull out of a purchase. Buyers typically have 56 days to complete but where the buyer requires a mortgage, care needs to be taken as there is no guarantee that the lender’s valuer will accept the property and issues can arise around how the reservation fee is structured. Buyers will need to be confident that their solicitor is experienced and responsive enough to be able to get the purchase completed in time and a mortgage adviser who has experience of arranging Auction mortgages.
Financial Adviser Financial Adviser Bristol Mortgage Adviser Property Update