More buyers and bargain fixed rate mortgages propel housing market
A large new wave of homebuyers shrugged off the August interest rate increase and entered the home buying market in September and October. According to our October survey, 56% of home buyers had been searching for a month or less - up 8% from 48% in July.
The research also revealed that both buyers and sellers are still confident that house prices will continue to rise with 80% of buyers and sellers expecting house prices to continue to rise over the coming year, on average 6.3%. This is despite the majority of them (more than 70% of respondents) believing interest rates are set to increase again, as soon as November.
Warren Bright, Chief Executive of propertyfinder.com said:
The acceleration in the number of new buyers coming to the market will sustain demand for housing right up to Christmas. This is a combination of a seasonal effect and the favourable mortgage market. While base rates are on the up, fixed rates on mortgages have actually been falling since the middle of September. Around 80% of borrowers typically opt for a fixed rate. Cheaper mortgages mean more home buyers and keep confidence in the market high.
Sellers less prepared to take low offers
Supply of property remains low, especially at the higher end of the market, while demand for homes is rising not juwst from owner occupiers, but also as property investors buy homes to meet demand from tenants - among them many of the 600,000 migrants who have come to the UK from new EU countries.
The tight market means sellers are now less prepared to take low offers. In October sellers were accepting offers on average 3.5% below the asking price, compared to 5.5% 12 months ago. Warren Bright said:
The price a seller actually achieves is far more important than asking prices when trying to asses the temperature of the housing market. Without even taking price increases into account, sellers are now squeezing an extra £4,000 out of the average home sale than they could a year ago simply by demanding offers closer to the asking price. This extra cash is more than enough to cover all their legal and moving costs - although it won't make much of a dent in the stamp duty bill for those trading up the housing ladder.
