By The UK has seen an unprecedented rise in house prices across the country in recent years as sellers demand top prices for their homes.
However, the past year has seen experts flummoxed as to what to expect in the coming months and years thanks to high inflation, the end of the stamp duty holiday, war in Ukraine and an increase in housing stock.
The UK is one of the only countries in the world to place such a high value on buying a home.
For many, it is the ultimate goal.
Since the financial crash of 2008, the country has seen house prices rise, in some cases to phenomenal levels.
But with Russia invading Ukraine in February 2022 a level of uncertainty has trickled into the world’s economies, and in turn hit the housing market.
Lenders have come out with a confusing picture, with some stating the upwards trend has continued while others have stated there has been the start of a decline.
Higher demand in Essex than Suffolk
Essex is one of the most diverse counties in the UK housing market.
At the highest end of the spectrum, properties close to Ingatestone in the south of the county can demand millions of pounds – prices similar to celebrity pads in Sandbanks.
However, travel to Essex’s Jaywick on the north east coast and you will find one of the most deprived areas in Britain, with house prices at the bottom end of the market and as little as £150,000.
Rebecca Hempstead comments:
“It’s incredibly diverse.
Because of that, I cannot see demand reducing in the county; you are always going to have people moving house at both ends of the spectrum because the demand is going to continue to be there, and supply simply cannot keep up with it.
At the top end, Shenfield is a great example and continues to do well because of Crossrail coming into the town and offering that great trip into London for commuters.
While the introduction of home working during the pandemic saw people wanting to move out of London, with an emphasis on staying at home more, we are going to see an increase in this reversing.
Already employers in the city are calling people back to the office, and those Essex properties with a good train line into the capital will continue to be important and demand higher prices.
Properties in Suffolk would continue to attract good interest thanks to their country appeal.”
Changing demand for new builds
One area which could see a change in demand is new build developments.
Traditionally in high demand, new builds are starting to see a change across Essex and Suffolk.
Rebecca Hempstead comments:
“Where we could see the market taper out is in the middle, specifically around new build homes.
We are already seeing some of this come to pass.
It used to be that you would buy a new build home off plan and it would be ready in six or nine months’ time with buyers not completing until long after they have discovered their new home.
Now there are more properties ready to move into almost straight away.
One of the issues we have seen in the last year are buyers who have secured a new build home, secured a mortgage offer but then that offer running out in six months’ time.
Because of the volatility in the housing market, that property has then been revalued for a new mortgage offer and often priced higher, increasing the risk for buyers.”
Coming to the end of an interest-only mortgage
When an interest-only mortgage ends, a borrower is expected to fully pay back the amount they originally borrowed.
This type of mortgage means only the interest is paid off each month leaving the total loan repayment until the end.
The reason why many people choose interest-only mortgages is down to the monthly payments.
With a capital repayment mortgage, the payments are much higher than interest-only as they are paying back the money they have borrowed rather than just the interest accrued.
With many interest-only mortgages due to end soon, there is a ticking time bomb for many who will struggle to get a new interest-only mortgage with higher rates they have yet to contend with on their current mortgage rate.
Rebecca Hempstead comments:
“The time is coming when this situation is going to throw up some hard questions for people. Either way, it is best to get your financial affairs in order well ahead of your mortgage deal coming to an end so you can put any measures you need in place.”
Advice for buyers and sellers
In times of uncertainty, there are steps to take that will help buyers and sellers ensure they are in the best place possible to proceed with a house sale.
Get your house in order.
When you put your house on the market, engage your solicitor straight away so you can get all of the necessary legal checks completed before any offers come in.
That way you are one step ahead when it comes to moving forward when that offer comes in from a buyer.
Sort out your finances when buying.
Knowing how much capital you have and where the rest of your money is coming from is vitally important to securing that all important exchange of contracts.
If you are in a position of being able to get a financial agreement in principle when you have an offer accepted, you could be having your surveys done the next working day rather than waiting weeks for it to be carried out.
For the time being, Mrs Hempstead believes house prices are going to do continue to rise.
However, where we are going to see the change is in how quickly they continue that trajectory.
In short, we can expect to see the slowdown in house price increases continue until the end of 2023 at the very least, and most likely beyond.
House price averages at a glance
Colchester, Essex
- The latest data from the Government reveals that in February 2023 average house prices in Colchester reached £326,751. This was down from £329,235 in January, representing a 0.8 per cent decrease. However, in the last 12 months it has risen by 8.4 per cent.
Chelmsford, Essex
- The latest data from the Government shows that in February 2023 average house prices in Chelmsford reached £383,440. This was down from £386,783 in January, representing a 0.9 per cent decrease. However, in the last 12 months it has risen by 4.1 per cent.
Basildon, Essex
- The latest Government data reveals that in February 2023 average house prices in Basildon reached £384,715. This was down from £386,721 in January, representing a 0.5 per cent decrease. However, in the last 12 months it has risen by 8.8 per cent.
Frinton, Essex
- According to RightMove, properties in Frinton-On-Sea had an overall average price of £367,414 over the last year. Overall, sold prices in Frinton-On-Sea over the last year were 11% up on the previous year and 16% up on the 2020 peak of £317,524.
Ipswich, Suffolk
- According to RightMove, properties in Ipswich had an overall average price of £281,332 over the last year. Overall, sold prices in Ipswich over the last year were 8% up on the previous year and 18% up on the 2020 peak of £239,193.
Bury St Edmunds
- RightMove has said properties in Bury St. Edmunds had an overall average price of £361,333 over the last year. Overall, sold prices in Bury St. Edmunds over the last year were 8% up on the previous year and 11% up on the 2018 peak of £326,725.
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