Cautious
Optimism in the
Gillingham
Property Market
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As the British and Gillingham property market navigates the
ongoing economic turmoil, many Gillingham homeowners and landlords may feel
uncertain about the future.
However, up-to-date data suggests that the 2023 property crash predicted
by the many newspapers and the usual clickbait doom-mongers in the lead-up to
Christmas on social media, may not be as bad as initially thought, and there
are reasons to be cautiously optimistic.
According
to property website Rightmove, the average asking price of a home for sale in
the UK rose by just £14 in February.
While this might sound like cause for concern, asking prices
remaining flat rather than falling could be seen as a positive sign for the
year ahead. Remember that they are only what people are asking (not necessarily
achieving).
So, what exactly is happening in the Gillingham property market?
Well, it all starts with realistic pricing.
Thankfully,
most Gillingham sellers are heeding their estate agents' advice and being more
realistic on price, helping maintain market stability.
If you are realistic with pricing, the property should sell.
The time it takes to get a property to sale agreed upon has
increased nationally from 21 days in the summer of 2022 to around 50 days in Q1
2023.
Additionally, despite the turbulent economic conditions, buyer
demand is rising. Rightmove also reported in the national press that the number
of people contacting estate agents has increased by 11% in the last two weeks
compared to the same period in 2019.
The number of sales agreed upon has also rebounded.
Nationally,
from 1st January to the 19th February 2023,
134,886
properties had been sold subject to contract in the UK.
Not a good figure when I compare it with the same year-to-date
sale agreed figures from the last couple of years.
2022 - 173,607 properties sold stc
2021 - 193,607 properties sold stc
But the last couple of years have been extraordinary for the UK
property market and should be taken with a pinch of salt in some respect. We
must compare 2023 with more normal years, like 2017/18/19/20. This tells a
different story.
2020 - 151,694 properties sold stc
2019 - 143,504 properties sold stc
2018 - 138,665 properties sold stc
2017 - 134,503 properties sold stc
The picture looks similar when we look closer to home in Gillingham.
In
Gillingham (ME7/8), in the first seven weeks up to the 19th February
2022, 233 properties sold subject to contract.
This year, from the exact 1st January to the 19th
February timeline, 209 properties have sold stc, which is lower, yet in the
same ballpark as 2017, 2018 and 2019.
Yet it is all terrific selling a house (subject to contract); it
is still only sold subject to contract, meaning the sale could fall through (as
it is not legally binding).
As an agent who likes to delve deeper into statistics, I
considered the 'net property sales'. (Net Property Sales being the gross
number of properties sold that week less the sale fall throughs in the same
week).
In the three months leading up to the Mini-Budget in September
2022, there was an average of 17,801 ‘net property sales’ per week in the UK.
That dropped by 34.7% two months after the Autumn Mini-Budget to an average of
11,624 ‘net property sales’ per week in the UK.
In
the last five weeks, that has rebounded to 17,050
‘net
property sales’ per week.
And when you consider the average for the same five weeks in
2017/18/19 was 18,330 'net property sales' per week, we are close to what many
considered a normal market.
Improving market conditions has been supported by a reduction in
average mortgage rates. Homebuyers taking out a five-year fixed-rate mortgage
with a 15% deposit can expect a rate of 4.39% (correct at the time of writing
with HSBC), down from an average of 6.1% in early October. This reduction in
mortgage rates may have contributed to the recent increase in buyer demand.
These
positive signs in the market have led some experts to suggest that a ‘softer
landing’ for the UK property market than initially expected could be on the
horizon.
The combination of sellers being more realistic on price and an
improving picture of the number of agreed-upon sales suggests a more positive
outlook for the property market.
I advise Gillingham homeowners coming to market in the upcoming spring
season to use their agent's expertise and get the price right the first time to
find the right buyer more quickly. If you do wish to chance a higher asking price,
only do so for no more than two weeks. If you haven't sold by then, take the
agent's advice and realign your asking price.
191
Gillingham homeowners have realigned their
asking
prices since 1st January 2023.
While it's true that some first-time buyers may still be priced
out of their original plans and may need to look for a cheaper property, save a
bigger deposit, or factor higher monthly mortgage repayments into their
budgets, there is still cause for optimism.
There is still a considerable demand for buying property in Gillingham
- renting is becoming increasingly unattractive for many people as rents are
increasing by double digits percentages.
It is important to remember that purchasing a property always
involves a trade-off between what one desires and what is affordable,
regardless of the market conditions. For example, while a four-bed detached
house may be out of reach, a larger and older three-bed semi-detached property
may be a more realistic option (and probably have similar square footage).
Gillingham
landlords looking to invest in buy-to-let homes – now may be a good time, as
rising rents could offer attractive returns.
Of the 181 properties let in Gillingham since the 1st
January 2023, the average rent achieved has been £1,052 per month. This is a
significant drop in the number of properties let in the same first seven weeks
of the years of 2017/18/19 and a massive increase in rents.
Finally, the newspapers will be full of news about house price
drops in the coming months. All the indexes report house sales where the sale
agreed price was offered nine to eleven months ago and completed (i.e. monies
and keys handed over) three or four months ago. This peculiar time lag means
the house price data is nearly a year old before publication.
So, if you decide to buy a home on that information, you are using
old property data. In late 2021/early 2022, there were 30+ viewings per
property, and people paid way over the asking price to secure a property. Now
there is more 'normality' in the Gillingham housing market; today's prices are
also more normal (at or slightly below the realistic asking price). So yes, the
house price indexes will show a reduction in house prices. The newspapers will
say house prices are crashing, yet when it is explained the way I have above ...
whilst it is not a newspaper clickbait title – it is the truth and it’s more of
a return to more 'normal house prices'.
So,
prepare for clickbait newspaper headlines of a house price crash (because
‘bad news sells newspapers’ as the saying goes).
Also, prepare for the doom-mongers to quote the bad news of the
earnings-to-house prices ratio at one of its highest levels ever.
Earnings-to-house price ratios are a poor
measurement of health in the UK property market. Instead, I believe
Nationwide's measure of first-time buyer mortgage payments as a percentage of take-home
pay is better (as it is actual pound notes out of actual pay packets).
The Nationwide measure of first-time buyer mortgage
payments as a percentage of take-home pay has grown for first-time buyers from
30.4% in Q4 2021 to 39.4% in Q4 2022 ... a massive rise! Yet mortgage interest
rates have dropped since then (so that percentage will fall). Also, to give
some context, let us not forget that percentage in 1989 was 48.4%.
Ultimately, Gillingham homeowners and Gillingham landlords should
decide, based on their unique circumstances, rather than being swayed by
newspaper headlines or general market trends. Anyone uncertain about the
property market's future should contact me for my opinion, advice and guidance.
If you are in the area feel free to pop into the office which is based at Station Road, Strood, Kent, ME2 4WQ
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