This week we have shone a spotlight on the struggles councils face to meet government housebuilding targets – and how the bill for temporary accommodation has doubled.

Today, reporter Alex Jee asks whether the county’s property price bubble is about to burst...

The housing market has experienced a turbulent time in the last five years. We’ve had the shock of Covid, Liz Truss’s brief reign and the cost-of-living crisis all impacting the potential for a dream move.

With demand having peaked amid the pandemic, as droves of Londoners sought to move to the Kent coast, new research suggests the market may have turned.

Four towns in the county are seeing some of the highest numbers of major cuts to asking prices in the UK, according to data from Zoopla.

In Thanet, more than one in five properties on the market (just shy of 21%) have had their asking prices slashed by 5% or more in the past 90 days – the highest ratio in the country.

In second is the Dover district, with 19.8%, while Maidstone and Canterbury come in at 18.6% and 18%, placing them seventh and 10th in the UK-wide list respectively.

So why is it a struggle to sell houses in these parts of Kent?

The ‘crazy’ Covid boom

At the beginning of the pandemic, house prices were expected to tumble – with experts warning that the fall could even be as dramatic as 13% in a single year across the UK.

While the drop in Kent was expected to be lower, at 11%, the impact was dramatically lessened by the government’s move to introduce a stamp duty holiday.

This allowed buyers to pay no stamp duty on all properties under £500,000. Previously, the charge was payable on purchases over £125,000.

Indeed, it resulted in a surge in demand for homes in 2020, when the country was first hit by the Covid pandemic and lockdown.

Kent was particularly impacted, with areas such as Canterbury seeing such a surge in activity from people wanting to move out of London that house prices jumped by 4% – or around £13,000 – in just three months.

In some areas, it was even more pronounced – prices in Sevenoaks soared by more than 44% by October 2020 from the start of the pandemic.

Ella Husk, senior marketing manager at Geering & Colyer estate agents in Dover, told KentOnline the demand across the county was “crazy”.

She said: “At the time you had houses that were going for far more than you would traditionally see. A house that you wouldn’t expect to be sold for more than £450,000 was getting offers in at £475,000 – which was absolutely crazy.

“The stamp duty holiday definitely influenced the market in that it incentivised people to make that move that they might otherwise have been demurring.”

Post mini-budget bust?

However, just as external factors like the Covid boom boosted prices, so too have incidents like Liz Truss and Kwasi Kwarteng’s disastrous mini-budget and ensuing inflation and mortgage rate spikes brought them back to earth.

Sam Edmonds, co-owner of Knight Edmonds in Maidstone, said: “When you had the stamp duty relief, people had more of an ability to move beyond where they normally would.

“For example, you might have someone in a two-bed house and – as they were saving £15,000-£20,000 in stamp duty – they could afford to make a move to a three-bed which they otherwise might not have considered.

“Now, you’re seeing more of a need to move and downsize, where people are coming to the end of their fixed-term mortgages and finding it’s going to be doubled or tripled in extreme cases.”

Charlie Bainbridge, director of Charles Bainbridge estate agents, told KentOnline there was a noticeable peak in the market post-Covid.

“Demand was going up as a lot of people were moving out of town as they didn’t want to be in an urban area,” he said.

“People had a lot of lifestyle change and supply remained consistent, so there wasn’t quite enough supply to match the demand and prices went up.

“That didn’t keep going in a linear fashion. That settled down into a plateau in the 18 months or so and then about a year ago the mini-budget in the autumn had an impact on the economic backdrop, then the interest rates.

“That, combined with the cost of living, which still remains high, has formed a melting pot that has had an impact on the market.”

But why are areas like the Canterbury district – including Whitstable and Herne Bay – and the Thanet towns, which are popular among second home owners, seeing some of the biggest asking price cuts in the country?

Could it be that Londoners are now looking elsewhere, at places like Folkestone where luxury developments such as Shoreline Crescent are being built? Sold prices in the town in the last year were 11% up on the 2020 peak of £284,634.

Mr Bainbridge says locations which traditionally commanded a premium are now seeing some of the most significant drop-offs.

He said: “Interest in the area [Canterbury] is very much still there, but affordability issues and lack of confidence mean that those prices – which have been put on at traditionally a premium for the area as you pay more for a sea view or access to a certain town – are dampened more than you might see in other areas, as people can’t afford what they ordinarily might be able to.

“Now, you have the same pattern as before, working in reverse. More property is becoming available, buyers have more to choose from, so sellers have to be more competitive in prices.

“It’s not as if a bubble has burst – it’s just really the impact of those elements.”

Tom Ross-Bason, regional managing director for Wards, says that while asking prices have been reduced in some parts of Kent, the statistics may not paint a full picture of the market.

“You are still getting agents who are overvaluing properties, so you can get these statistics that are always slightly out of kilter, especially if they are based on asking prices,” he said.

“Some estate agents are still not educating sellers about mortgage rates and interest rates, and so that can mean that houses go up at higher rates than they perhaps should, hence the reductions.”

What now?

So what will happen to the housing market in Kent now? While some areas remain steady, will others continue to drop slowly, or freefall?

Mr Ross-Bason said: “While it’s hard to be sure, we are predicting that the market will do nothing for the next 12-18 months. We certainly don’t see a recovery this side of Christmas, and are predicting a similar market in 2024.

“We’ve got an election upon us at some point, the Bank of England is still cautious, inflation is coming down but not significantly enough to increase spending power, and mortgage lenders are still sceptical about what the market can do.

“We don’t have a stamp duty holiday – the Covid backlift that we had. What we have in truth is a traditional marketplace that we haven’t seen for some time.

“We were very much spoilt by the end of Covid that saw an unprecedented rise in prices and demand, and this feels like a much more dramatic fall than it actually is, due to the inflated market at the end of lockdown.”