Looking at the newspapers with their doom and gloom headlines, you would
think that the Neath property market (and the British property market) would be
on its knees.
Yet ring some Neath estate agents for a viewing or free valuation, and
if you can get an appointment within a week to ten days, you are doing well!
British properties continue to sell in good numbers.
In July and August 2022, sales have been agreed on an average of 25,476 UK properties per week.
Interesting when compared to the averages of 27,351 sales agreed per
week in 2021 and 26,382 sales agreed per week, year to date in 2022.
So why is the Neath property market defying all expectations?
It is because there is an absolute shortage of properties to buy on the
books of Neath estate agents, meaning Neath house prices are being kept buoyant
(as demand exceeds supply).
Today, there are 149
properties available to buy in Neath. Roll the clock back to October 2007, the
month before the last house price crash, and it was 807.
That’s 82% fewer properties to buy today in Neath than the month before
the property crash.
Notwithstanding
suggestions that the Bank of England’s higher interest rates would peter
out British house price growth, the continued limited supply of properties
coming onto the market has helped Neath house prices climb.
Neath house prices are 16.4% higher today than a
year ago.
Nevertheless, there is evidence that the insane demand for property has
started to ease, and supply is increasing, which means that the direction of
the Neath housing market will begin to change in the coming months.
This can be seen in several ways.
Back in January and February (2022), 8,094 UK properties per week were
reducing their asking prices, whilst this July and August that had risen to an
average of 13,115 UK properties per week. This is significant as some
‘optimistic’ homeowners who placed their properties on the market in the spring
and early summer have had to reduce their ‘optimistic’ asking prices to attract
buyers.
Also, the number of UK house sales falling through (i.e., when the
sale is agreed yet the sale falls through before the legal paperwork is
completed) is starting to creep upwards from an average of 5,558 properties
a week in the spring of 2022 to 6,854 per week in July and August 2022.
Neath house prices
have risen over recent times; the latest figures are based on what was selling
in the late winter/early spring of this year and subsequently completing the
sale in the early summer.
The prices
obtained by the estate agents on properties achieving a sale in Neath today (i.e.
in the autumn of 2022) are slightly lower than what was obtained nine
months ago. This means the house statistics published in early spring 2023 will
slightly reduce. Nothing to worry about – I want to give you a heads up and not
to be concerned. The simple fact is …
we are returning to a more normal Neath housing
market this autumn, compared to the crazy last 30 months since the end of
lockdown one.
With UK inflation standing at 9.9%,
this brings an interesting scenario for Neath property values.
Reducing ‘real’ wages will hit
first-time buyers and existing homeowners’ disposable income, while the same
high inflation will make the Bank of England increase interest rates.
These things will significantly reduce
homebuyers’ capacity to afford their mortgages as the fewer people who can take
out a mortgage; the fewer buyers will buy homes.
The
Bank of England base rate currently stands at 1.75%, yet forecasts suggest it could end the year between
2.75% and 3%. Yet let us not forget the long-term average over the last 50
years has been between 7.1% and 7.2%, and many mature Neath homeowners will
remember Bank of England Base Rates of 17% in 1979, so these sorts of increases
are still off a low base.
During
these autumn months though, the lack of properties on the market and available to
buy still support Neath house prices. The newspapers compete for attention and
use clickbait titles to generate more interest in the publications.
The
simple fact is that unless something seismically happens in the world to change
things materially, the Neath and British property markets will continue to
harden slowly and will face some different challenges compared to the last 30
months, but fundamentally Neath house prices will remain broadly neutral over
the next 12 to 18 months.
These
are my thoughts; what are yours?
