Published by: Lucy GoodgameEstate Agents brace for a slowdown as affordability and cost-of-living crises set to impact the property market
The average price of a UK home reached a record high of almost £277,000 in February, a near 10 per cent increase over the past year.
However, with a backdrop of soaring energy prices, interest rate increases, war in the Ukraine, and rising inflation, vendors and Estate Agents alike are wondering if this will translate into fewer transactions as the year progresses.
For now, the number of buyers remains healthy, with the number of first-time buyers entering the market at record levels. Average prices are still being driven upwards – albeit at a slower rate - by the disparity between supply and demand. The UK continues to suffer from a lack of housing stock and the laws of supply and demand will keep house prices relatively high for the time being.
So, while forecasts of a housing price drop have not yet been realised, the mounting financial uncertainty is likely to cause an unavoidable impact on the housing market as the year rolls on.
According to calculations from trade association UK Finance, the Bank of England interest rate increase earlier this month added around £26 per month onto a typical tracker mortgage repayment. Additionally, the average mortgage rate on new lending has recently leapt from 2.4pc to 3.2pc, the highest rate seen since 2014. With rising inflation and more interest rate hikes on the horizon, it seems inevitable that there will be some sort of slowdown as buyers are forced to look again at their budgets.
Exacerbating matters further is the soaring gas and oil prices caused by Russia’s invasion of Ukraine. Last week, the oil price hit $105 a barrel, a level not seen since 2014, and petrol prices are forecast to surpass £1.70 a litre. This will fuel inflation will likely increase the prospect of higher interest rates from the Bank of England, sooner than previously predicted. All of this will undoubtedly have an impact on the property market. By the last quarter of 2022 and onward into 2023, the full force of these interest rate rises and associated higher mortgage costs will be felt by homeowners. Financial experts are predicting that this perfect financial storm could lead to a 10% drop in house prices. Although some say that this kind of fall would simply be bringing prices in line with pre-pandemic projections, the reality is that challenging times are coming.
Estate agents everywhere will attest to the fact that when the going gets tough, it is their marketing efforts that determines if they can keep going.
In order to future-proof themselves, agents must ensure their marketing strategy is up to scratch. Including high-res floorplans in property particulars is especially crucial, given that a recent survey undertaken by Rightmove found that more than 33% of potential buyers would be less inclined to ask about a property if there was no floor plan, and 20% of potential buyers would ignore a listing without a floorplan altogether.
Rightmove have increased their fees substantially already this year, prompting many estate agencies to take the bold decision to step away from the costly monthly subscriptions of the pricier marketing portals like Rightmove and Zoopla, towards taking charge of all their digital marketing in-house going forward. With savings in the region of £2.5K per month per branch, it is clear to see why this is seeming an increasingly attractive prospect. Many agents are having great success combining the more affordable portal, On the Market, supported by heavily bolstered e-marketing made possible with Webdadi.
One such example is The Nash Partnership, an award-winning Hertfordshire-based agency that is thriving using this approach. They have mastered the perfect balance of using On the Market paired with their own website, designed by Webdadi to maximise leads.
Webdadi provide the perfect solution for those looking to build a combined Estate agency Website, CRM system, and digital marketing solution all on one platform. The added bonus is that this package of estate agent software will likely work out far cheaper than buying a website and a separate CRM from two different suppliers.
With Webdadi, you’ll benefit from a website built especially for the day-to-day demands of a busy estate agent, that stays up-to-date and wins you more instructions – exactly what you need to stay ahead of the game in the current climate.
Book a conversation with one of our expert website consultants to find out how you can save money and increase applicant viewings to your websites.