The cumulative decline in UK house prices is urging estate agents to think outside the box when looking to sell homes within their current property portfolio. A seemingly endless plethora of economic obstacles, higher interest rates, the possibility of job cuts and a spike in the cost of living, are currently making it more difficult to sell residential properties, putting pressure on agents to drop their asking prices.
According to The Guardian (The Guardian, 30 December 2022, UK house prices fall for fourth month in a row, longest run since 2018), UK property prices have been falling at the fastest rate in 14 years and on 1 February 2023 Nationwide Building Society announced that prices had at the end of January fallen for the fifth consecutive month, making this the longest negative run since the global financial crisis in 2008.
No surprise in rising mortgage rates
This is not a total surprise as in December 2022, Nationwide Building Society’s chief economist, Robert Gardner, predicted a 5% drop in prices in 2023, while Halifax painted a more gloomy picture with an 8% forecast, a single percentage point less than the Office for Budget Responsibility’s prediction of 9% (Reuters, 20 December 2022, UK’s Nationwide forecasts 5% house price fall for 2023)
With sluggish growth affecting all regions in the UK, the annual growth rate, according to The Guardian (The Guardian, 1 February 2023, UK house prices fall for fifth month in a row), is currently at 1.1%, down from 2.8 % in December 2022. This is the lowest it’s been since June 2020 when the UK housing market emerged from a hard lockdown in the initial stages of the Covid-19 pandemic.
In addition, the mortgage approval rate is the lowest it’s been since the start of the pandemic; even lower than economists had expected.
Paying off a property has become much more expensive. Forbes reported on 19 January 2023 (Forbes, 19 January 2023, What’s the latest UK mortgage rates?) to curb inflation, the Bank of England raised interest rates on 15 December 2022 from 3.0% to 3.5%, marking the ninth rise since December 2021 when the Bank rate stood at just 0.1%
The downward trend in property prices is set to continue with Forbes expecting the market to slow down further and property prices to fall by another 2% in 2023. As a result, buyers are more reluctant to buy, opting to see how the market develops this year.
How Vibrant can shield you and your customers from this downward trend
Fortunately, there is a way to cushion the blow for your customers. Moving your customers property to a greener portfolio and maximising the energy efficiency of their buildings makes it financially attractive to your buyers as they would save on monthly energy bills.
A few simple changes can make your customers property and your overall property portfolio more attractive and therefore easier to sell and at a better price. It all starts with an Energy Performance Certificate (EPC), a certification that measures the energy efficiency of a property on a scale from G (least efficient) to A (most efficient) as well as provide guidelines and estimates of costs on how to improve the energy efficiency of a property.More on EPC Plus
Having committed to a Net Zero carbon position by 2050, the government is encouraging everyone to be a C (or better) by 2035. Money Supermarket recently published an article explaining how a better energy efficiency rating would improve the value of a property (Money Supermarket, 13 September 2022, How energy efficiency impacts property values). They said increasing the EPC rating from a D to an A would increase the value of a property by as much as 14%, while simply improving from a D to a C would add an average of 10% to the value of a house.
More buyers are moving towards “greener” energy efficient properties. Residential development head at Shakespeare Martineau said in Inside Housing (Inside Housing, 11 August, 2022, Buyers want green homes. But the market and government need to catch up) 77% of people in the housing market have indicated they are likely to consider a green home as their next property, mostly due to environmental concerns. Add to that the financial incentive of a more energy efficient house, and your residential property becomes highly sought after.
To learn more, contact Vibrant