Looking at the newspapers with their doom and gloom headlines, you would think that the Norwich property market (and the British property market) would be on its knees with house prices falling.
Yet ring some Norwich estate agents for a viewing or free valuation, and if you can get an appointment within a week to ten days, you are doing well!
British properties continue to sell in good numbers.
In July and August 2022, sales have been agreed on an average of 25,476 UK properties per week.
Interesting when compared to the averages of 27,351 sales agreed per week in 2021 and 26,382 sales agreed per week, year to date in 2022.
So why is the Norwich property market defying all expectations?
It is because there is an absolute shortage of properties to buy on the books of Norwich estate agents, meaning Norwich house prices are being kept buoyant (as demand exceeds supply).
Today, there are 1,041 properties available to buy in Norwich. Roll the clock back to October 2007, the month before the last house price crash, and it was 3,453.
That’s 70% fewer properties to buy today in Norwich than the month before the property crash.
Notwithstanding suggestions that the Bank of England’s higher interest rates would peter out British house price growth, the continued limited supply of properties coming onto the market has helped Norwich house prices climb.
Norwich house prices are 9.7% higher today than a year ago.
Nevertheless, there is evidence that the insane demand for property has started to ease, and supply is increasing, which means that the direction of the Norwich housing market will begin to change in the coming months.
This can be seen in several ways.
Back in January and February (2022), 8,094 UK properties per week were reducing their asking prices, whilst this July and August that had risen to an average of 13,115 UK properties per week. This is significant as some ‘optimistic’ homeowners who placed their properties on the market in the spring and early summer have had to reduce their ‘optimistic’ asking prices to attract buyers.
Also, the number of UK house sales falling through (i.e., when the sale is agreed yet the sale falls through before the legal paperwork is completed) is starting to creep upwards from an average of 5,558 properties a week in the spring of 2022 to 6,854 per week in July and August 2022.
Norwich house prices have risen over recent times; the latest figures are based on what was selling in the late winter/early spring of this year and subsequently completing the sale in the early summer.
The prices obtained by the estate agents on properties achieving a sale in Norwich today (i.e. in the autumn of 2022) are slightly lower than what was obtained nine months ago. This means the house statistics published in early spring 2023 will slightly reduce. Nothing to worry about – I want to give you a heads up and not to be concerned. The simple fact is …
we are returning to a more normal Norwich housing market this autumn, compared to the crazy last 30 months since the end of lockdown one.
With UK inflation standing at 9.9%, this brings an interesting scenario for Norwich property values.
Reducing ‘real’ wages will hit first-time buyers and existing homeowners’ disposable income, while the same high inflation will make the Bank of England increase interest rates.
These things will significantly reduce homebuyers’ capacity to afford their mortgages as the fewer people who can take out a mortgage; the fewer buyers will buy homes.
The Bank of England base rate currently stands at 2.25%, yet forecasts suggest it could end the year between 2.75% and 3%. Yet let us not forget the long-term average over the last 50 years has been between 7.1% and 7.2%, and many mature Norwich homeowners will remember Bank of England Base Rates of 17% in 1979, so these sorts of increases are still off a low base.
During these autumn months though, the lack of properties on the market and available to buy still support Norwich house prices. The newspapers compete for attention and use clickbait titles to generate more interest in the publications.
The simple fact is that unless something seismically happens in the world to change things materially, the Norwich and British property markets will continue to harden slowly and will face some different challenges compared to the last 30 months, but fundamentally Norwich house prices will remain broadly neutral over the next 12 to 18 months.
These are my thoughts; what are yours?
Stats from Land Registry, Nomis, Home website, Office of National Stats and Denton House Research.
Nick Eley, Partner, Head of Sales & Lettings
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