Buyers are making a welcome return to the housing market, thanks to the recent pause in bank rate hikes, according to recent data. The prospect of lower mortgage rates has ignited buyer confidence, with estate agents reporting a 12% increase in enquiries on homes for sale since the August bank holiday.

While it's important to note that this boost comes from a relatively low base, with buyer demand still down by 33% compared to the same period last year, it's encouraging to see demand now closely tracking 2019 levels.

Traditionally, September sees more buyers returning to the market, but this upturn in enquiries also reflects an overall improvement in consumer confidence, which has now reached a two-year high.

Regional Variations in Buyer Activity

The impact of rising mortgage rates on demand has not been uniform across the country. Southern England, particularly London, bore the brunt of these rate hikes. However, buyer numbers are showing signs of recovery, with a 19% increase in the South East and a 16% increase in London.

Moreover, the number of new sales agreed has risen, and these figures are now in line with those seen in 2019. The return of supply to the market is also providing buyers with more options, giving them greater flexibility in their choices.

Buyers Unwilling to Compromise

Buyers appear unwilling to compromise on their property priorities. Rather than settling for less, first-time buyers are exploring longer mortgage terms to ensure they secure a home that meets their needs for the long term.

While mortgage rates above 5% have reduced buying power, buyers are still seeking properties of similar type, size, and price to those available in the summer of 2022. Some regional variations exist, such as increased demand for apartments among first-time buyers in London. However, the overarching trend is that buyers are holding out for the homes they truly desire.

House Prices Affected by Mortgage Market Volatility

The uncertainty in the mortgage market this year has deterred many homeowners from moving, subsequently affecting house prices. Zooplas’ index reports a 0.5% decline in prices over the last year, marking the first annual decrease in over a decade.

The steepest declines are observed in southern England, where homes come with higher price tags, necessitating larger mortgages.

While house prices are expected to fall by 2-3% throughout 2023, they will still remain 17% higher than they were at the start of 2020. Even if mortgage rates drop below 5%, house prices are likely to continue declining through the first part of 2024.

Ultimately, lower mortgage rates hold the key to improving buyer affordability and revitalising the property market.