Why is the UK Property Market Currently Characterised as a Buyer’s Market?
This year, property reports from various sources have reported that the buy-to-let property investment market has shifted to a buyer’s market.
Sellers in the housing market have been forced to lower their asking prices due to higher interest rates, making mortgages less affordable.
According to Halifax, Britain’s biggest mortgage lender, this state of affairs has led to the fastest fall in UK house prices in 14 years. In September, they recorded a 4.7% dip in house prices, the largest year-on-year decrease since 2009.
They state that the average price of a house in the UK is now £278,601, down from £292,197 in the same month last year.
Housing transactions are down compared to recent years, meaning buyers have more leverage without having to compete as much with other buyers.
What is a Buyer’s Market?
In property, a buyer’s market occurs when supply exceeds demand. When properties are more abundant compared to the amount of people who want to purchase one, this puts the power in the hands of the buyer.
This means UK property investors can take their time deciding on the perfect property as there aren’t as many other buyers to compete with. They also have more leverage to barter with the sellers and haggle the asking price down.
The effect this has on the property market is that it will be slower moving, making transactions less frenzied. Activity will be subdued, and sellers will be forced to reduce asking prices, perhaps several times to attract buyers or in response to price negotiations with potential buyers.
Does a Buyer’s Market Mean Now is a Good Time to Buy Property?
For those currently looking for the right property to let out, a buyer’s market is good news. Buyers currently have the advantage over sellers in price negotiations, and there is more property to choose from on the market.
According to Halifax, the UK housing market will continue stagnating for the next couple of years, but growth looks set to return from 2025 onwards.
Prices are predicted to fall further in the meantime, but waiting to buy until prices decline more could be a mistake. The market can be unpredictable, and there’s no guarantee that forecasts are correct, so it’s very easy to miss the moment and end up paying more.
Stay up to date with our guide to UK House Prices 2023.
Will The Buyer’s Market Continue?
Buyers may be put off by the current slow-moving market, and property owners may be put off from selling by unfavourable conditions.
However, the UK property market has proved itself resilient when faced with the ebbs and flows of the economic landscape. Overarching trends point to strong growth in the future, which will benefit those who buy now in the form of capital value accumulation in the future.
As growth returns in the coming years, the market will likely balance out once again.
Want to know how to get into UK property? At RWinvest, we have many guides outlining the latest property investment trends, market analysis and investment tips!