Expectations following a booming Covid & post-Covid period
Like many estate agents across the country, we were ‘gearing up’ for a much tougher market during the first quarter of 2023 and beyond, following the ‘post-lockdown’ housing market boom and subsequent interest rate rises. ‘Pent-up demand’ and stamp duty holidays drove activity, as did the working-from-home phenomenon – which saw huge numbers of out-of-county buyers selling their city homes in search of a better quality of life down here. This was evidenced by Rightmove, who announced Cornwall overtook London as the most searched for location in the country. Sustained periods of time at home during various lockdowns made homeowners realise what they did not have, and what they did therefore want. Notable requirements were bigger gardens and home office spaces.
2023: Don’t always believe the headlines
Little did we expect activity to be quite so buoyant, although it is certainly not where it was. There is still a significant volume of buyers seeking good opportunities within our markets and there are no signs of this slowing down. Clearly, Cornwall is only becoming an increasingly popular place to live. Predictions of waves of people ‘selling up’ and moving back to the cities is a myth, at least in our opinion. We cover some of Cornwall’s most beautiful locations and we see the area as a ‘bubble’, sheltered, at least partially, from wider macro-economic factors which typically hit other places much harder. The Global Financial Crisis, for example, saw prices tumble throughout the country, yet prices bounced back quickly here compared with other areas.
Outlook for the remainder of the year
What are the main factors slowing the market down? Pricing. Pricing. Pricing.
The ‘bid ask spread’, although now much narrower than earlier in the year, is still suppressing the market’s liquidity. Evidenced by properties taking, on average, longer to sell. That being said, good properties in desirable locations are still selling at premium prices. In some cases, properties are selling at higher levels than ever before. Perhaps too many owners still expect their home’s value to have continued on the upward trend though, despite downward pressure on borrowing due to consistent interest rate rises (note another earlier this week, and more likely to come…), utility bill hikes, and general inflation. Buyer appetite has slightly dwindled, naturally, although buyers are expected to (and need to) realise that there are not ‘amazing discounted deals’ available, because the market’s demand still outweighs supply. Low offers are generally not considered, because they do not need to be. At least, not now.
We are evolving into a more ‘normal’ market, where buyers have the time to market their home, accept an offer, and make a meaningful bid on an onward purchase. Fewer cash buyers appear active. We expect this trend to continue.
We do forecast an increase in supply as we delve deeper into 2023. Those nearing the end of their fixed mortgage periods will have to seriously consider the next steps as repayment costs ramp up. This scenario will likely result in people selling to downsize/release equity and investors offloading properties to free up capital for other means.
In summary: The market is not as bad as the tabloids tell you, it’s buoyant, but buyers and sellers must find a ‘middle ground’ in order for its liquidity to continue. A good agent will price appropriately to ensure this happens.