In a recent development, the Bank of England has escalated interest rates for the seventh consecutive time to 2.25%, a peak not seen since 2008. This move has ignited conversations around its potential impact on the housing market.

To gain a clearer perspective, we analyzed the data from the past fortnight, capturing the real-time changes in home-moving behavior.

Prior to the mini-budget announcement, the housing market was grappling with the effects of the pandemic and multiple lockdowns. The scale of demand far outweighed the supply of available houses, pushing the average asking prices to a record high. However, as more properties entered the market in 2022, this demand began to soften, gradually returning to pre-pandemic levels.

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Mortgage rates had been steadily increasing throughout the year and saw a further rise after the unexpected tax cuts in the mini-budget. These fluctuations, coupled with unforeseen events in financial markets, have direct implications on the economy. This has prompted the Bank of England to potentially raise interest rates faster and higher than previously anticipated, thereby impacting the costs of fixed-rate mortgages and leading some lenders to reprice their packages. Nevertheless, mortgages are still within reach, with mortgage brokers available to guide prospective homeowners based on their individual circumstances.

In light of these economic changes and uncertainties, consumers may rethink their decisions about significant investments, like buying a house. Despite these apprehensions, the number of completed transactions in the past two weeks has remained consistent with the 2019 housing market trends, and previously agreed-upon deals have mostly held up.

In terms of supply, there was speculation that more people might defer their moving plans, leading to a potential decline in the number of houses on the market. Contrary to these predictions, there has been a slight increase (4%) in new listings since the mini-budget announcement, offering homebuyers a wider range of options and moderating the pace of house price growth.

Although there has been a small uptick (1%) in asking price reductions over the past two weeks, the current 23% of properties with price reductions is significantly lower than the pre-pandemic five-year average of 32%. Furthermore, over half (54%) of estate agents believe new sellers are open to realistic pricing and accepting lower offers.

On the demand side, while the number of people viewing properties for sale has remained stable, there has been a 12% drop in the number of inquiries for property viewings. This shift may be attributed to homebuyers reassessing their budget in the wake of rising interest rates and mortgage costs.

Despite the drop in inquiries, the number of sales agreed has remained steady, signifying that home moves continue for those who can manage it. Prospective homeowners need to adopt a long-term view when searching for the perfect home.

Looking ahead, October 31st holds significance as the government plans to unveil a detailed budgetary plan, including projections from the Office for Budget Responsibility. This will provide clarity on how the government intends to fund the tax cuts announced in the mini-budget, potentially easing market anxieties.

In conclusion, while the recent rate hikes and economic uncertainties have brought about some shifts in the housing market, the overall landscape remains robust. Both supply and demand are holding steady, and potential homeowners continue to navigate their way through these changes. The upcoming budgetary plan will hopefully provide greater clarity and stability for the market.

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