'Softened' housing market means selling will take longer

We asked group sales and land manager of housebuilder Darcliffe Homes Jonny Denton to give Thames Tap an overview of the Reading housing market following the interest rate rise to five per cent. He senses the market is normalising after the crazy period of recent years.

I seem to remember an advert with the strap line ‘turning generation rent into generation buy’.

Now though, rental prices are through the roof; from what I have heard a one-bedroom flat in Reading has gone from £950 per month to £1,400 per month in a very short period of time.

A major factor in this will be that it has been made so unattractive to own a buy-to-let property that stock levels have decreased significantly, with people disposing of their assets.

Obviously the hike in mortgage rates will have hit the buy-to-let landlord hard and subsequently rents have gone up to compensate.

For an individual to take a rental property your salary needs to be three times your repayments and in those circumstances people generally find a way. However, to own a property and gain a mortgage you can generally borrow up to five times your salary.

What are you going to be more incentivised to pay? I understand Skipton Building Society are trialling a scheme, which enables people who have responsibly rented for a period, to have a lower bar to take a mortgage ie below the five times your salary benchmark which I will watch with interest.

The market I feel has softened, which needed to happen as it got crazy throughout 2021/2022 – but there is still a sales market out there. I feel many people have decided to sit on their hands, to wait to see if rates come down, and who can blame them if, a year ago, they were obtaining mortgage agreements in principle at half the rate.

Low interest rates have become an expectation and, whilst uncertainty is in the air, people generally don’t make big decisions, something which was proven in the Brexit market.

My view is it will take time for the three, four or five per cent mortgages to become the norm in people’s expectations and then a buoyant market will return.

The other obvious issue is, with the sheer expense of everything right now, it has made it harder than ever to save for the all-important deposit, which is a double-whammy when looking at gaining a mortgage.

I am still seeing demand and there is a sales market and enquiries are still frequent, it’s just that buyers can afford to be more picky and seek quality as they are not hounded to rush decisions, frequently having multiple offers on the table, ie we have returned to normality and we won’t necessarily sell a place within two days. It may now take time like it used to.

You would like to feel the Government will again intervene with another version of Help to Buy, but time will tell.

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