A leading estate agent has said that the biggest monthly fall in UK house prices in two years is the ‘cooling down’ and ‘rebalancing’ that is needed in the property market.
According to the Nationwide’s House Price Index, prices fell 1.4 per cent from October, which was the largest month-on-month fall since June 2020. Annual house price growth also fell sharply from 7.2 per cent to 4.4 per cent in October.
It is thought the decline in prices is largely due to rising interest rates putting off buyers.
Ramona Hirschi, Managing Director of Belvoir Stoke-on-Trent, said it was time to look at the bigger picture to understand what was actually happening to the market.
Ramona said: “No doubt many have seen that houses prices have seen the biggest fall in two years.
“When reading such news, we need to step back and take a wider perspective on the house price growth we have experienced in Stoke-on-Trent and the West Midlands in the last 5 years, spanning the Covid lockdown periods.
“In the 12 months to the end of October 2022, Stoke-on-Trent saw a 9.9 per cent growth in house prices. Going back 5 years, that figure stands at a 29.8 per cent price rise. It is only the flats that have experienced price drops of 11.4 per cent in the last 12 months, after having experienced a 40.5 per cent rise in 5 years.
“In the last two years, we have experienced a heating up of the property market due to Covid and lockdown creating a demand for people to relocate, downsize, to take advantage of the stamp duty holiday and so on.”
Ramona added: “Remember that whilst most industries were in lockdown, the housing market (and estate agents) were in lockdown for two months only. The level of activity from sellers and buyers we experienced from May 2020 to July 2022 was, at times, unmanageable.
“So, what we are seeing now is just a rebalancing of the housing market. The heated level of activity had to cool off, to reach a better equilibrium between supply and demand.”
Ramona, who is a Staffordshire Chambers Board Member, said that the reduction in prices would also benefit a key sector of the market.
She added: “This cooling off may help first time buyers get onto the property ladder, if they can secure mortgages. The good news for us in Stoke-on-Trent and the West Midlands is that our house prices were holding steady till the end of October. The data has not yet come out for November 2022, but I suspect a small price drop across the board.
“They are not expected to go down more than 10 per cent over the next year, and they are still likely to be higher than pre-covid 2019’s prices. Property ownership is still a good thing, and over time, property prices always go up due to land being a finite resource.”