Is the North Devon housing market close to bottoming out?
Is the housing market close to bottoming out now?
I think we are probably a few months away from the bottom, broadly speaking.
Recent commentators have said that there needs to be a drop in interest rates to restart house price growth and fuel activity. More affordability is needed.
I don’t think that’s likely to happen anytime soon. Rates come down slowly, go up fast and stay there for sometime.
I hope I am wrong but I think we will have rates at broadly where they are now for at least 3 years.
In my mind the key drivers on price and activity are still supply and demand.
Affordability has changed for the medium/long term due to higher interest and mortgage rates. But prices have and are adjusting to realign with these new affordability levels.
Demand is still strong and one of the key reasons prices haven’t fallen harder over the last 12 months.
Supply remains woefully low at all entry points, house building is way behind and sellers of existing properties are still short of choice in most cases.
If you can’t see a selection of good options to move to, you most likely won’t try to sell until you do. The majority of valuations I have carried out over the last 2 years have still not entered the market to sell.
This has been the case for many years now and this situation won’t resolve itself quickly, so relatively low supply/choice is here to stay.
While affordability is unlikely to improve substantially, it has begun to stabilise and a new norm will establish itself.
Rents have increased dramatically, so for those lucky enough to be able to buy, this is still a better option than staying in a volatile rental market.
For investors, whilst the regulatory framework is becoming much more restrictive, rents have risen to compensate and so for all but the ‘old school’ landlords, its still a worthwhile exercise.
This is particularily so now interest rates are stabilising and banks are still not really offering good savings alternatives to buy-to-let investments. Landlords may want to sell up but the returns aren’t any better elsewhere.
While this is the case, demand will begin to rise further, limited supply will fuel more competition and prices will begin to rise.
Predictions are notoriously unreliable, of course, but that’s where I see it right now.
What do you think?
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