A surprising amount of resilience
If you have been reading or listening to mainstream national media outlets, you may be led to believe that the property market is in disarray and the wheels are about to come off.
The reality here in Doncaster may surprise you. There are obvious challenges in the wake of the cost-of-living pressures and inflation increases, but it’s not all doom and gloom.
The reality is, Doncaster’s local property market has remained resilient considering mortgage interest rates have been on the rise, and we have less in our wallets due to price rises in energy, food, etc.
More typical mortgage costs have returned
The Bank of England has been increasing its base rate of interest for some time following an extended period of ultra-cheap money.
The graph below shows the change in the Bank of England's base rate over the last year. The graph also tracks the average mortgage interest rate of five-year fixed-rate products for borrowers with a deposit of 25%.
As you can see, after the infamous mini-budget in September last year, lenders were spooked and increased their rates rapidly, only to reduce them shortly after.
Lenders were spooked again recently when new inflationary data was released fuelling expectations that the Bank of England would increase their base rate again, which they did on the 22nd of June. Lenders have been anticipating this and so many have already factored it into most of their fixed-term products.
Source: Bank of England (note: at the time of publishing, the most recent data available from the Bank of England for average mortgage rates was the 31st of May)
Property supply continues to fall short of demand
The key reason for Doncaster’s housing market resilience is the same as it has been for a long time. There simply aren’t enough properties for sale to satisfy the demand. That has kept house prices relatively stable. As you can see from the graph below (which lags a little due to the time it takes to complete sales) prices swelled last summer and have been correcting slightly since. Sales completed in November would typically have been agreed upon twelve weeks prior. According to HM Land Registry, the average house price in Doncaster completing a year ago was £159,633, it peaked at £169,002 in November, and in March stood at £162,404.
Buyers are a little more cautious with their budgets now and not so willing to stretch themselves as far as they may have once done. This has had some cooling effect in certain price ranges but has made others more popular.
Source: HM Land Registry
Doncaster’s property market does not experience such significant swings in price trends that other larger cities do. Prices tend to move in much smaller increments due to the relatively lower average house prices compared with other areas, especially London. For many, the slowdown in the growth of house prices is welcomed. The post-covid property buying frenzy was always going to be unsustainable. The market here in Doncaster looks like it is returning to more typical pre-covid conditions.
Are there buyers out there right now?
There are definitely buyers out there right now eager to secure a new home. The volume of sales being agreed upon and buyer activity is now more consistent with pre-covid conditions.
The cost of living pressures and increase in rental prices have created some surprising and unforeseen results. For example, we are seeing renters bring forwards their homeownership plans in order to reduce their outgoings. Lenders like Skipton have reacted to this trend by offering renters deposit-free mortgages to enable them to get on the property ladder.
Is now a good time to move?
This will depend largely on your reasons for moving. Remember, there is no perfect time to move or buy your first home. Property prices and interest rates will always fluctuate at any given time, but you are likely to be in your home long after the current news is old news.
Property prices have consistently increased over the long term. Therefore, it may be wiser to focus on finding the right home for you, rather than the timing of the purchase.
The Property Hive is here to help and has many years of experience in helping people to move in all market conditions. Feel free to give us a buzz at 01302 247754, our advice is free!
