House prices are soaring, with September 2020 seeing a 5pc increase alone, but top line numbers don’t tell the whole story. The market is forecast to suddenly fall off a cliff edge, so why hasn’t it happened yet?
The frustrating thing for both buyers and sellers in the market, is that these figures tell us what happened several weeks or even months ago, because of the slow nature that property has, and the lag in reporting data.
To understand exactly what is happening now, we must look through the noise.
We must take note of anecdotal evidence, think laterally, and rely on more traditional indicators. At the minute, these may prove to be far more important – and suggests that the market that has defied some experts’ expectations is already running out of steam, and at some rate.
Mortgage approvals are up – in August they hit a 13-year high, however, the sheer lack of low deposit mortgages available is a more important factor. TSB has stated that it will only offer mortgages to those with deposits greater than 40pc, which essentially cuts out any buyers except equity-rich second-steppers. According to UK Finance, the trade body, the average mortgage has a 32pc deposit.
You may believe that this is just one bank’s cautious approach, however it really reflects the subtle yet crucial changes to mortgages that are creeping in, and that homeowners can’t see, which will gradually shape the property market.
For those applicants that can secure mortgages, a spike in the demand for them combined with lenders’ reduced processing capacity means that the waiting time between applications and mortgage offers has more than doubled. Meanwhile, wait times for conveyancers, surveys and valuations have soared, with some groups refusing to take on new business, leaving transactions in limbo and unable to complete before the stamp duty deadline.
This coupled with other things shows the increasing anecdotal evidence that this is causing deals to fall through, as chains break down and buyers back out.
It’s crucial to tune into these signals, and more traditional sources of data, to drown out the noise of the headline facts.