Is the Burton Property Market On A Go Slow?
With the number of Burton properties selling this Autumn dropping due to several factors, is the Burton property market starting to run out of steam? What does 2022 have in store for local homeowners and landlords? Read this article to find out...
In recent articles on the Burton on Trent property market, I have been talking a lot about house prices over the last 12 months and 5 years.
When it comes to newspapers talking about the property market, the headline most people look at is what is happening to house prices.
However, as 2 in 3 (65.1%) of Burton home sellers are also home buyers, the price is almost irrelevant. Let me explain.
If your property has gone down in value, then the one you want to buy has also gone down in value, so you are no better or worse off. If you are moving up the market – which most people do when they move home – in a suppressed property market the gap between what yours is worth and what you will buy gets lower which means you will actually be better off!
Many property commentators, me included, consider a better measure of the health of the property market is the transaction numbers i.e. the number of people selling and buying.
Let’s take a look at the numbers for East Staffordshire as a whole, which includes Burton on Trent.
The average number of properties sold in Quarter 1 (Jan/Feb/March) between 2008 and 2020 was 124 properties per month, whilst Quarter 1 in 2021 saw 160 properties sell on average per month (boosted by the February stats where an eye watering 193 homes sold). This meant…
29.3% more houses sold in the area in Q1 2021 than the 14-year average
The average number of properties in Quarter 2 (Apr/May/Jun) between 2008 and 2020 was 137 properties per month, whilst Quarter 2 in 2021 saw only 108 properties sell on average per month, meaning…
21.6% less houses sold in the area in Q2 2021 than the 14-year average
Finally, whilst the exact stats for Quarter 3 2021 for our local authority won’t be published by the Land Registry for a couple of months, I can make certain calculated assumptions from the national data published by HMRC. The number of property sales for our local authority area in Quarter 3 (Jul/Aug/Sept) between 2008 and 2020 was on average 150 properties per month. However, using the HMRC data, I calculate there will only be 118 properties sold on average per month in Quarter 3 2021. This means…
20.9% less houses sold in the area in Q3 2021 than the 14-year average
One of the two main drivers of activity in the housing market in the latter half of 2020, meaning Q1 figures were better than the long-term average, was the battle for space, with many Burton buyers seeking larger properties to work from home. The second was the short-lived tax relief measures such as the cut to Stamp Duty Tax meaning property prices were at an all-time high.
But what also might surprise you is the number of people buying for the first time.
1 in 4 mortgages since lockdown have been for first-time buyers (25.12%)
Burton on Trent first-time buyers, buoyed by parental help with their deposits, the Government’s 5% deposit mortgage and ultra-low borrowing costs, have also helped to push house price growth since the start of 2021. In fact, if you split down house price growth between second time, third time etc. buyers and first-time buyers, the national annual house price inflation for first-time buyers is 9.2% compared to 8.1% for the second or third etc. buyers.
Yet, the Q2 and Q3 2021 Burton property market was worse than the long-term average in terms of property transactions.
The question is – should we be worried?
The UK economy continues to deliver a benevolent framework to the British housing market.
The labour market has outstripped expectations with the millions expected to join the dole queue at the end of furlough failing to materialise and with the number of job vacancies on the rise.
Of course, and I mentioned this in my recent posts, the Bank of England is projected to increase interest rates to dampen inflation in the coming months, with further small rises predicted over 2022, so I do expect the demand for property to cool off as mortgage borrowing costs increase.
Normally such rises in mortgage costs would mean less property would sell, yet nothing over the last couple of years has been normal.
Many Burton property homeowners have held back putting their property on the market in the last 6 months because they were afraid, they would sell their own home but not find another to buy but nothing could be further from the truth – yet that is what a lot of people incorrectly believe.
If the Burton property market slows and interest rates rise, mortgage costs will still be very low by historical standards.
Also, if the obstacle of raising the 5% deposit can be overcome by first-time buyers plus a confidence that existing homeowners won’t be made homeless because of a cooling property market, many more people could be tempted to enter the property market by placing their property for sale first, thus opening up the market to more buyers, which in turn will drive up transaction numbers back to their normal 14-year average. However, raising a deposit is likely to remain the primary obstacle for many.
If you are a Burton homeowner or first-time buyer and want my thoughts on the future, then please do drop our team a line, or give James a call on 01332 300140.
2022 is going to be an interesting year ahead for the Burton property market – only time will tell if this will be a brief respite or is it running out of steam?
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