In a welcome development, inflation has shown signs of easing, reaching its lowest level in over a year and providing a glimmer of hope for a more competitive mortgage market in the coming months.

According to Nicky Stevenson, Managing Director of Fine & Country, the property market continues to exhibit promise, with motivated buyers still actively seeking correctly priced homes, bolstered by a relative scarcity of properties for sale compared to historic norms.

Although a cooling in house prices is widely anticipated, forecasts suggest a more moderate pace than initially projected earlier in the year.

“Despite prevailing economic conditions, transaction numbers are holding steady. The latest data from HMRC indicates a seasonally adjusted total of 85,870 transactions in June, representing a 6% increase over May figures. Although this marks a 15% decline from June 2022, it demonstrates resilience in the market. Moreover, mortgage lending exhibited an uptick in June, reaching £20.0bn, with net approvals reaching 54,700, the highest since October 2022, indicating positive signs for future borrowing,” says Stevenson.

She notes that in response to buyer affordability constraints and rising mortgage costs, the average price of properties coming to market experienced a slight decline of 0.2% this month. Sellers are becoming increasingly receptive to market realities, with 6.5% of available homes seeing asking price reductions of 5% or more, surpassing the five-year average.

“According to the latest market update from TwentyCi, there are ‘no signs of a housing market crash,’ based on Q2 sale volumes and a significant 70% of all properties listed being sold thus far in 2023.

“Notwithstanding this optimism, an uncertain economic backdrop is reflected in a 10% increase in fall-throughs compared to Q1.

“Nonetheless, both buyer and seller sentiment have surprisingly remained robust, with two-thirds of sellers confident they will find buyers within three months, and 74% of buyers expressing confidence in purchasing property within the same timeframe. Demand from buyers has also shown a 3% increase compared to 2019, as reported by Rightmove, signifying continued interest in correctly priced homes.”

Amidst the uncertainty, committed movers continue to pursue their objectives, especially for smaller, sensibly priced homes located in affordable areas near major employment hubs. “However,” adds Stevenson, “mortgage interest rates are having a more substantial impact on higher-value segments of the market where borrowing costs are more pronounced. Zoopla’s recent findings reveal a notable drop in new sales for three- and four-bedroom family homes in the past month, compared to typical numbers for this period.”

According to Stevenson, another trend shaping the market is the increasing demand for energy-efficient homes. The latest RICS survey shows homes with higher Energy Performance Certificate (EPC) ratings have proven more resilient in pricing compared to those with lower ratings. In addition, over a third of respondents expressed greater interest in energy-efficient properties.

Focusing on the prime property market, Stevenson says: “Resilience remains apparent, with the average property price standing at £1,299,767. Although experiencing a marginal 0.1% decrease from the previous month, the prime market has witnessed a substantial 8.2% year-on-year increase. Cash continues to be a preferred option for buyers in this segment, who are largely unaffected by mortgage rate fluctuations. Furthermore, the scarcity of prime stock seen during the pandemic seems to have eased, as availability in the £1mn+ price bracket has risen by 45% since the pandemic’s onset.”