The last few weeks have probably been the hardest I’ve ever known to write about property, and indeed, to advise people on what to do when it comes to their next property decision. On Friday 14th October I was trying to write articles and keep them up to date while listening to the news – the only time I normally do that is for a budget! I gave up trying to write in the morning, did them late evening and then by Monday, they all had to be revised – again.

Some people won’t be that badly affected by the latest issues.

However, despite all the doom, gloom and chaos, it’s important we keep perspective and appreciate that some people won’t be that badly affected by the latest issues:

1. Over 50% of people own their home outright – not affected by mortgage rates
2. Those on five-year fixed rate mortgages, particularly the 2.8 million people who have bought over the last couple of years and those that don’t have to remortgage until this time next year
3. Sellers who are selling to one of the 30% cash buyers. Yes, they might receive a lower offer, but most are likely to have gained equity over the last few years, so can afford to ‘lose a little’
4. Cash buyers and those with high disposable incomes and low loan to value mortgages are also reasonably protected from the current issues
5. Upsizers always benefit from a market slowdown, they may lose a little on their own property value, but typically save a higher percentage on the one they are buying
6. Downsizers have typically been in their home for 20+ years, and even in the lowest price growth areas (for example the North East), property prices have risen pretty well since this time, so they will have made great equity gains, free of any tax (if it’s their main home).

Will first time buyers continue to be key to the market – or not?

In the past, the current mortgage issues, which are most likely to affect first time buyers and buy to let investors, would have held upsizers and downsizers back from being able to sell. The rule of thumb was, when FTBs (and BTLs) can’t buy, the market cannot move.

But this has changed too. With an ageing population we have many more downsizers, so it’s quite possible that the ‘house’ market can keep moving, with downsizers and upsizers continuing to be able to buy and sell, which might mean some properties continue to rise in value if demand continues to outstrip supply for an individual property on a specific street.

Can we have a crash when prices haven’t ‘boomed’?

Although many have described the rises during the pandemic as a ‘boom’, the stats I look at say differently for two reasons. Firstly, some of the rises have been exaggerated due to a higher mix of houses versus flats sold. While many indices have shown double digit rises, Zoopla is showing less than double digits – although still higher growth than pre-pandemic.

Secondly, there is a big differential between house and flat price growth. Zoopla’s stats show that flat prices ‘on average’ have risen just 9% during the pandemic, while houses have risen by 21%. And in many places, flat prices haven’t risen at all.

If you take a look at the North East, which has traditionally had the lowest property price growth, although property price averages recovered to 2008 levels in 2021, flat prices are still lower: £103,063 in July 2022, versus £107,390 at their height in 2008. So, the question is, if flat property prices haven’t ‘boomed’ at all, will they still fall at the rates predicted of 10-15%?

Finally, property prices across the country are rising and falling at completely different rates. Aberdeen has seen price falls since March 2015 (Land Registry) and only recently seeing a small uptick – and rents have fallen here too. They are down 14% over the last 10 years.

In contrast, Nottingham average prices have risen by 56% since March 2015. But again, this is driven by houses – flat prices remain just that, flat!

As far as I’m aware we’ve never entered a potential recession and the likelihood of property falls with a market that’s so diverse, which makes it so difficult to know what will happen next.

What about renters?

And finally, the hardly talked about rental market. In the last credit crunch recession, the rental market grew at the biggest rate since 2000. But what will happen in 2023? We are in a situation now where we haven’t got enough properties in the PRS versus the ever-growing demand, and thanks to negative government policies, landlords have been selling up rather than investing.

What if the recession and pending property market problems cause a further rise in demand for the rental market? Will we, by the next election, literally have run out of homes for people to live in?

The next few years for me will give us a much better understanding of the property market and how it works. We are so lucky to have so much more data from the likes of the Land Registry and amazing analysis and forecasts from the likes of Savills, Zoopla, Knight Frank, Capital Economics, CEBR, Colliers and many more.

My prediction? It’s likely that the result will be that property prices and rents will be extremely individual and the future of ‘averages’ reflecting the market for consumers at least, will be over. So, big news, prices and rents will go up, down and stay the same over the next 12 months!