Cheadle Property Market Update August 2022
Let’s be honest, August has been pretty miserable for most families and as we look forward, there would appear to be some very worrying and challenging times ahead, as the cost-of-living crisis worsens and really starts to bite as we head into the darker, colder months over Winter.
So, what else has happened? We have endured some of the hottest weather ever recorded, Rishi Sunak and Liz Truss have continued traversing the country, telling anyone prepared to listen how they are going to solve all the issues caused by the Government, funnily that they have served in for a number of years! But at least the Premier League season has started again for those who have missed it!
On the property front, the national and local press and media are in an absolute frenzy of negativity now and predicting a doomsday scenario for home buyers and sellers towards the end of 2022 and into 2023. Depending on who you listen too, it could mean house prices dropping from anything between £5000 and £20,000.
The property portal Zoopla predicted the other day that first time buyers will now need to find another £12,000 just to get on the ladder. The figures are even gloomier for buyers in London and the Southeast.
Richard Donnell of Zoopla said “Some out priced first-time buyers will look to buy smaller, lower value homes as rising costs and interest rates impact affordability. Higher mortgage rates for new loans have more than doubled since the start of 2022”. There are also considerably less mortgage products available to choose from as lenders get increasingly jittery as to where the market is heading.
However, Rightmove said the other day that asking prices are still up 7.8% year on year in July, but this is down considerably from the 12.1% increase the previous month.
Rightmove also said that average asking prices dropped almost £5000 in August to a new average of £365,173. This news all comes ahead of a further expected interest rate rise later in September.
However, somewhat bizarrely, according to the Nationwide, prices were 10.0% higher than in August 2021, a slowdown from July’s 11.0% increase but also above the Reuters poll forecast for a rise of 8.9%.
Robert Gardner, Nationwide’s chief economist did however strike a cautionary note, saying there were signs that the housing market was losing momentum after the surge in demand for bigger homes during the COVID-19 pandemic.
“We expect the market to slow further as pressure on household budgets intensifies in the coming quarters,” Gardner said.
2023 predicted to see lowest number of house sales for a decade
There are obviously a number of scenarios that could play out here, but none offer a great deal of comfort. The rate rises, lack of choice of mortgage deals and perhaps some people deciding to stay put and consolidate for a while could lead to a cooling in the market, with 2023 predicted to see the lowest number of house sale completions for a decade. If a significant number of people are forced to sell and downsize to reduce costs, then of course this is likely to force prices down, especially if there is very low demand. Either way, the outlook has turned considerably gloomier very quickly, and it would be wise to act now to avoid being caught in any downward spiral.
Of course, things are often never as bad as the newspaper headlines would like you to believe and people will always need to move – births, deaths, divorces, schools and employment will still have many needing a new home, but maybe just in lesser numbers.
And, when we break down the national picture to our micro market in SK8 and SK3, we can see better what is starting to happen here too.
New listings in SK8 and SK3 remain buoyant
Looking at the number of new listings that came onto the market in August, we saw that it remained on an upward trajectory, with a very healthy 22% increase over the same period last year. Now this could be for a variety of reasons, but it suggests that sellers are looking ahead and realizing that if they want to sell at the best price and move before any significant drop in prices or change in market conditions, they are best doing it now. Interestingly, it was most noticeable in the number of detached and semi-detached homes coming to the market, which were up 115% and 59% respectively. More choice is of course good for buyers. However, there was not much difference in the number of terraces, flats, or bungalows.
The first indication that consumer/buyer interest was cooling, was noted in the July figures, where we showed that the number of daily property views on Rightmove had dropped 15% over the previous year.
In August 2022, that drop has risen to 25% down from 170 in August 2021 to 127 in August 2022 – that despite there being 7% more stock to choose from. Some of this can be attributed to the usual seasonal fluctuation due to it being peak holiday period, but many forecasters will see this as the start of a more sinister decline in buyer activity generally. September will be a more accurate barometer of that!
The year-on-year average percentage price increases have been dropping now for several months. However, if you own a detached home in the area, prices year on year are still showing a healthy 6.7% uplift and stand at an average of £479, 200. Semi detached homes have increased 8.4% and are now worth an average £341,700. Terraced homes have dropped ever so slightly by 0.3% to an average £267,400 and flats have taken the biggest hit, dropping 11.8% and now stand at an average £172,300.
It is highly likely that with changing market conditions, prices may very well start to flat line and even possibly drop a little towards the end of the year, but we will of course be keeping a very close eye on the monthly fluctuations.
The final image looks at the number of properties sold in the area in August. Again, what is interesting, is that the numbers are very consistent with the year before, with just a modest 5% increase in the number of sales, which suggests that demand has remained very good and even though there are less people looking on Rightmove and the portals, those who are, are clearly serious buyers.
Whilst the picture nationally is changing rapidly and there are numerous reports providing conflicting information about the future of the housing market, so far, the market in Cheadle and the surrounding area is showing tremendous resilience.
The key to selling now is pricing a property correctly. There probably isn’t the margin to try and inflate an initial asking price and see what happens. That market has passed.
There are many who are predicting a significant drop in prices in 2023 and others who are predicting a cooling and levelling off, without any dramatic drop. We think that with the cost of living crisis set to get worse, inflation going up at an alarming rate and peoples wages clearly not keeping pace, plus rising interest rates and lenders revising their lending policies, it is almost inevitable that there will be a cooling off in demand in Q4 of this year and into 2023. However, unless any recession starts to hit employment, we feel that the SK8 and SK3 markets are strong enough to ride it out and unlikely to see the Armageddon scenario, predicted by many commentators.
We do maintain however, it would probably be advisable to bring any selling plans you might have forward as the uncertainty surrounding the economy and what may lie ahead is not good and can create an unstable market and give buyer’s jitters and potentially just take a watching brief to see what happens, rather than do anything.
If you would like to know the current value of your home in today’s market, please call Joe, Patrick or Maurice on 0161 428 3663, e-mail firstname.lastname@example.org or visit our website, choose your preferred method of market appraisal and book online here Book a FREE valuation
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