House sales set to tumble this year on recession jitters, experts warn
House sales are set to tumble due to owners waiting until the recession passes to cash in on their homes, estate agents have predicted today.
Homeowners are expected to adopt a wait and see approach during the first six months of 2023 for fear they will have to sell their property at a lower-than-demanded price.
Higher mortgage rates caused by the Bank of England hiking borrowing costs nine times in a row to tame the worst inflation surge in 40 years has priced would be buyers out of the market.
That means sellers may have to lower prices to attract bidders.
According to data provider Moneyfacts, the average rate on typical two-year and five-year mortgages have more than doubled over the last year.
Matthew Thompson, head of sales at estate agent Chestertons, said: “Despite the uplift in viewings and new properties coming onto the market in December, we have noticed that there are fewer people looking to sell in the first part of this year, with many preferring to wait and observe how the market develops.”
Home sales have been slowing since last summer and dropped to just over 108,000 in December, numbers from HMRC today showed.
Frances McDonald, research analyst at estate agent Savills, said: “Increased mortgage rates and uncertainty surrounding the UK economy started to slow housing activity in December.”
However, other data indicates home sales are likely to fall sharply over the coming months.
The Bank of England said mortgage approvals collapsed around a third in November, mainly triggered by UK borrowing costs skyrocketing after Liz Truss’s disastrous mini budget.
Mortgage approvals data capture when a provider commits to lending to a borrower, not when a home is sold, which tends to be much further down the purchase line. This means future home sales data is usually weak.
However, the rate bump will put more money in the pockets of savers.