Sponsored Editorial by Aldo Sotgiu, managing director of Wards

At last, some good news! So, it’s official, the Office for Budget Responsibility (OBR) released documents alongside Jeremy Hunt’s Spring Budget announcing that house prices are going to fall by 10% from their high in 2022, with prices not expected to recover until 2027 or even 2028.

It says indicators from Halifax and Nationwide suggest house prices have already fallen by 3-6% from their peak.

Wait, what? Falling prices good news? How can that be right?

Well, let’s put some context around this.

Firstly, we’re not talking about a price crash, there’s no sign of that happening, however, the housing market across Kent and the rest of the south east has had a sustained period of house price inflation, so I’d prefer to refer to the need for a “price correction” and for a big chunk of people that could be a very good thing.

As always, there are winners and losers, but if the OBR is correct, then there could be a silver lining after all.

I think we all feel helping first-time buyers onto the housing ladder is a good thing, right?

We all want our kids to have an opportunity to own their own homes and have the opportunities that previous generations had, so making home buying more affordable has to be a good thing. A healthy market needs first-time buyers, and a bit of house price deflation won’t do new entrants into the market any harm.

What if you are thinking about upgrading and selling your own home? The likelihood is you are looking to pay more for your new home.

Whilst you might take a hit on your existing property’s value, say it’s worth £350,000, a 10% drop on that is a £35,000 loss but if you are looking to buy a property at £475,000, passing that 10% drop upwards means a £47,500 discount on your onward purchase.

As the property market has slowed to more normal levels, we are also seeing a big uplift in available homes.

One of the things that held back a lot of potential sellers and buyers over the last couple of years wasn’t just the rise in prices but critically a lack of supply.

We are currently seeing housing stocks, some 75% higher, than this time last year. We’ve gone from high demand and low supply to low demand and high supply, and we all crave a stable market.

So that property which simply wouldn’t appear last year (and let’s face it, if it did, it would have been snapped up straight away at a higher price) might now be available, it might be at a much better price than you anticipate, and they may even take an offer on that. So, another positive.

At Wards we have seen that the rental market is continuing to struggle for the supply of property.

Finding a property to rent is very much like a needle in a haystack and much of this is because investors simply haven’t been buying buy-to-let properties to supply the private rental sector.

The returns on investment or yields have been so low with record purchase prices, along with some other unhelpful barriers that have been put in place by the government, which means it’s been very unattractive as an investment.

With lower prices, we are already seeing investors come back to the market. Whilst there isn’t a huge groundswell of sympathy for buy-to-let landlords, they form a massively important part of the UK housing economy and we need them to put roofs over people’s heads, especially as a lack of long term strategy from the government means we have a woeful lack of council/social housing to bridge the gap.

Whilst all of this is good news, there will be some losers.

If you’ve got a property that you are looking to sell and are reliant on a lump sum or equity from it with no attached transactions, then the advice probably should be now, get it sold as soon as possible or dig in and wait until things start to improve, though my feeling is this might be a bit of a wait.

With the amount of equity most homeowners have amassed over the last few years, it is very unlikely we will get into the position we’ve been in in the past, with negative equity and repossessions if you are not moving, the tens of thousands you’ve made on your house over the last five years becomes might be a bit less, but it’s far from a disaster. What you never had, you don’t miss, right?

If we go back to where we started, I am always hugely sceptical about predictions.

In my experience, things are neither as good nor bad as first thought and an overall correction for what, let’s face it, has been a massively overheated and unsustainable market bringing demand back in line with supply at much more realistic levels is something we should all welcome with open arms.

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