Is the Housing Market as Scary as it Seems?

Published: 12/11/2022 By Sarah Gent

Why the Housing Market isn’t as Scary as it Seems

So many people are holding off moving because of today’s market, interest rates are on the rise and house prices are falling, but what if I told you, it isn’t all as black and white as it seems. Earlier on this year, the market was buzzing, houses were flying off the market with huge amounts of interest and people offering thousands over the asking prices, and because of this, it was almost rare for a property to be sold for its true value. Therefore, agents could put properties on the market for much more than they were worth, which is what lead to this seemingly huge drop in prices. What we are seeing today is simply a slower market, properties on the market are being sold for closer to what they were valued at because there aren’t so many people looking to move. The market earlier this year was very active, the general cost of living was lower and there were more buyers than houses.

If an item up for sale has a lot of interest in it, the seller can get more money for it because people want it so much more than everyone else. If there aren’t as many people interested, then why would the consumer pay more than necessary?
 Whilst, if you were to sell your house today, you might get a little less for it than you would’ve earlier on this year, that doesn’t mean that moving now is a huge mistake. A house is a long-term investment, you are going to live in one for your whole life; During that time house prices are going to fluctuate, they always do, but on the grand scale of things, they are always rising.

Photo credits: (2022). UK House Price Index. Land Registry.

The big questions to ask yourself are: What am I waiting for? Will waiting benefit me in the long term? Is my dream worth giving up?

Let’s put ourselves into different scenarios, because everyone’s situation is different. Take the example of renting a property for a year or so while you hold off buying a property, because you want to wait until the market “calms down”. By doing this, instead of starting to pay off your own mortgage, you’re helping someone else pay theirs. This is money you will never get back, money that could’ve gone towards something you can call your own, your own home.

Another helpful example is for first-time buyers; Mortgage interest rates have gone up, no doubt about it. A first-time buyer at the beginning of the year would’ve been looking at a 2.79% rate for a 2-year fixed rate mortgage, that now is a 5.89% rate (source Nationwide 12/11/2022). If, for example, that was for a £150,000 mortgage for 35 years, a few months ago you would’ve paid £558 a month compared to the £840 you would pay now. Yes, this is a huge jump and yes it seems scary, but compared to renting that same priced property, it’s not too different. For the same priced property, the average rent is £750 a month, that extra £90 for a mortgage is the difference between borrowing a house and owning a home. Ask yourself, is your dream of owning a home important, why would you want to let that dream go?

Furthermore, who’s to say that waiting is going to help? The future is unpredictable. You might wait for two years only for rates to increase again, making waiting a waste of time.
Mortgage rates have been low for a long time, this sudden increase is scary, but the rates now are actually closer to what they are expected to be. This means they are more reliable than before. A common thing which many people are experiencing today is a price increase in their mortgage payments, some are even expected to double. However, already we have been hearing percentage drops from lenders, they may only be small at the minute, but it makes for a good start.
The media is our worst enemy. I can’t remember the last time I saw a positive news article. They love to feed us intimidating headlines which cloud our judgement so easily. Word of mouth spreads so quickly and all of a sudden, everyone has made their mind up about something which they don’t necessarily know all the details of.

A house is a long-term investment, which means forever. Ask yourself why you’re buying, if owning a house, your own home, is worth it to you and you can afford it, why wait? There will always be some excuse not to, but waiting won’t always benefit you.
Millions of new cars are bought each year, the second they are driven off the forecourt they loose value. If it was the money people were worried about, why would so many people buy new cars knowing they are guaranteed to down value? A similar analogy goes for going on holiday, spending money on a holiday isn’t an investment at all, yet people don’t care about that, they care about having fun and making memories. Many of you, I’m sure, go away during the school holidays, whilst it's peak season and consequently, most expensive, the price doesn’t change your mind. Compared to buying a house, a long-term, life long, investment which you will eventually make money off, these excuses seem irrelevant.
I ask you again, is your dream of owning your own home worth giving up? Whatever your reason for wanting to buy is, whether it be so that you can decorate without having to check with your landlord, to build a family, or just to have something to call yours, don’t be put off by the rumours you’re hearing. Chances are, you haven’t heard the whole story yet.

(Mortgage rates of course change on a daily basis, and so do house prices. This article is not a personal recommendation, and everyone has different circumstances. Please do however contact us so we can arrange for a 1-2-1 private consultation so we can chat through what is best for you and with the Key Group we can give advice on what is right for you, all you need to do is ask. Call us on 024 7635 7645)