Is Southampton a Buyers’ or Sellers’ Property Market?

 

A Comprehensive Guide for Southampton Homeowners

In the ever-changing world of Southampton property, the terms ‘buyers’ market’ and ‘sellers’ market’ are phrases bandied about.

These property market conditions can significantly impact your ability to buy or sell a Southampton property, regardless of which side of the fence you find yourself on.

As a Southampton estate agent, I will provide you with a detailed analysis of the Southampton property market to find out if we are in a buyers’ or sellers’ market and offer valuable tips to navigate through them successfully.

Additionally, I will shed light on a lesser-known market condition called a ‘balanced market’. So, let's delve into the nuances of these markets and equip you with the knowledge to make informed decisions on buying and selling in Southampton.

What is a Southampton Buyers’ Market?

A ‘buyers’ market’ occurs when the number of Southampton homes available for sale exceeds the number of potential buyers. In this scenario, buyers hold the advantage, as they have more choices and can take their time to make decisions. They may even negotiate with sellers to secure more favourable prices. This is an ideal market for Southampton buyers as attractive deals are plentiful, while sellers face the challenge of standing out in a sea of properties for sale.

 

What is a Southampton Sellers’ Market?

Conversely, a sellers’ market arises when there is a higher demand for homes than available inventory. This creates a power shift in favour of sellers, who can benefit from increased competition among buyers. In a seller's market, Southampton properties tend to sell quickly and sellers often receive multiple offers, driving up property prices. This market can be challenging for Southampton buyers, as they may face bidding wars and have limited negotiating power.

 

Introducing a Balanced Market.

Apart from the buyers’ and sellers’ markets, a balanced property market exists where the number of people looking to sell property matches the number of potential buyers. In a balanced market, equilibrium is achieved, leading to stable prices and a reasonable timeframe for property sales. This market condition offers a fair playing field for both buyers and sellers, creating a more harmonious real estate environment.

 

Understanding the Dynamics: Supply and Demand of Southampton Property.

At the core of these property market conditions lies the principle of supply and demand.

Southampton home buyers have the upper hand when the supply of Southampton homes surpasses the demand. Conversely, when demand outpaces supply, Southampton house sellers hold the advantage. Recognising which property market you are in is crucial for making informed decisions, regardless of whether you are a buyer or a seller.

 

What Kind of Property Market is Southampton in?

The best way anyone can judge the market is to analyse the percentage of properties marked as "Sold STC" (Sold Subject to Contract) and "Under Offer" in relation to the total stock of properties on the market.

E.g. if there are 500 properties on the market (both available and sold stc/under offer) and 200 are sold stc/under offer … 200 as a percentage of 500 is 40%.

Everyone can do this by searching the property portals (e.g. Rightmove, Zoopla and OnTheMarket) by searching for Southampton and calculating it by asking for the results with sold stc/under offer and without sold stc/under offer.

The designated property market states are as follows:

 

·         0% to 20%: Extreme Buyers' Market

·         21% to 29%: Buyers' Market

·         30% to 40%: Balanced Market

·         41% to 49%: Sellers' Market

·         50% to 59%: Hot Sellers' Market

·         60%+: Extreme Sellers' Market

 

This methodology is widely used by many professional property traders, corporate asset managers and developer part exchange providers to quickly assess the temperature of any local market. It offers a reliable and efficient measurement of market heat, enabling informed individuals to select the right strategies and stay ahead of the market to achieve superior results.

The statistics have been sourced from website ‘The Advisory’, which have calculated the market state stats for many years. I wanted to share them back to the summer of 2018, so you can see for yourself.

What are the Statistics for Southampton for the Last 5 Years?

 

	Jun-18	Jun-19	Jun-20	Jun-21	Jun-22	Dec-22	Mar-23	May-23	Jun-23
SO14	44%	32%	24%	45%	56%	47%	41%	38%	37%
SO15	55%	46%	35%	64%	68%	60%	59%	61%	59%
SO16	47%	47%	41%	70%	74%	66%	55%	55%	56%
SO17	54%	43%	37%	63%	65%	63%	58%	53%	56%
SO18	60%	52%	46%	75%	77%	66%	65%	61%	60%

 

 

You can quite clearly see Southampton went into an extreme sellers’ market during 2021 and 2022 and is still at a level higher than pre pandemic.

 

Now of course this could all change, so let me explain both extremes for either market.

Tips for Southampton Home Sellers in a Buyers’ Market

Selling a Southampton property in a buyers’ market can be daunting, but you can improve your chances of success with the right approach. Here are some valuable tips for Southampton home sellers:

1. Be realistic with your asking price: If the Southampton property market becomes a buyers’ market, home sellers will need to understand the challenging market conditions and set a competitive price from the beginning. Overpricing will deter potential Southampton buyers from even viewing and lead to your home being on the market for months. People will start to think there will be something wrong with your home and dismiss it even more.
2. Present your Southampton home at its best: In a competitive buyers’ market, making your property stand out is vital. Consider staging your home and completing any necessary repairs to make it more appealing to home buyers.
3. Maximise your exposure: Effective marketing is crucial, particularly in a buyers’ market. Collaborate closely with a reputable local Southampton agent with extensive area knowledge and a strong marketing team to ensure maximum visibility for your property. Gone are the days of just putting the property on Rightmove and hoping.
4. Be prepared to negotiate on more than the pound notes: Price is not the only factor in negotiations. Buyers may also be open to discussing terms and conditions like what you are leaving regarding fixtures and fittings, so be flexible and willing to find common ground.

 

Tips for Buyers in a Southampton Seller's Market

If you find yourself navigating a sellers’ market as a Southampton buyer, these tips will help you improve your chances of securing the right property:

1. Define your necessities: Clearly understand your property needs and prioritise them. Be prepared to compromise on certain aspects to increase your chances of finding a suitable property.
2. Be friendly: Build a positive rapport and relationship with the home sellers on the viewing. This can really work in your favour. First impressions can make a difference.
3. Act quickly: In a seller's market, hesitation can lead to missed opportunities. If you come across a Southampton property that meets your criteria, schedule a viewing promptly and be prepared to make an offer if it resonates with you.
4. Make fair offers: While everyone wants a great deal, offering a reasonable price shows respect to sellers and increases the likelihood of your offer being considered. Silly low offers are often dismissed in competitive markets and can sometimes offend.
5. Practice patience: Although speed is essential, exercising patience is equally vital. Rushing into a decision can result in regret. The right property will come along, so balancing acting swiftly and making informed choices is critical.

 

Understanding the dynamics of buyers’ and sellers’ markets is essential for both buyers and sellers in the Southampton property market.

By grasping the nuances of each market condition and applying the appropriate strategies, you can maximise your chances of achieving your Southampton property goals. Whether you find yourself in a buyer's market, seller's market, or a balanced market, adapting your approach and working closely with an experienced local agent will significantly enhance your chances of success in the ever-changing world of real estate.

But let me leave you with this one last thought. Regardless of whether it's a buyer's or seller's market, it's important to recognise the interconnected nature of these market conditions.

 

A significant statistic to consider is that 81% of sellers are also buyers.

 

This means that as you gain an advantage as a seller in a hot market, you may face challenges when transitioning to the buyer's side. 

Conversely, in a buyers’ market where you have the upper hand as a buyer, you might encounter difficulties when selling your own property.

It's crucial to understand this dynamic and plan accordingly, as the dynamics of the Southampton property market are often a delicate balance between gaining and losing, and this holds true for both buyers and sellers.

These are my thoughts, do share yours in the comments or by reply.

I have £210,000 to invest — is a Southampton rental property still worth the risk?

 

"We have recently inherited £210,000. We have contemplated purchasing a Southampton buy-to-let property to support our early retirement. Considering that the Skipton Building Society offers a 4.25% return on their 18-month bond and the stagnant Southampton property market, we are uncertain whether investing in a rental property is worth the trouble. 

Kind regards. Mr & Mrs A from Southampton”.

 

Dear Mr & Mrs A from Southampton, if your primary objective is to generate income and reduce your workload, buying a buy-to-let property is likely not the favourable option unless you leverage the purchase. Let me explain …

The Skipton Building Society, 4.25% Bond, would provide you with an income of £9,450 annually.

Excluding the initial set up costs of solicitors and Stamp Duty, for £210,000, you can buy a 2-bed terraced house, which would rent for around £1,100 per month (or £13,200 per annum) meaning a return of 6.29%!

Yet, when you rent a property, you need to allow for management fees and maintenance, so the return would reduce to £11,220 per annum or yield an equivalent rate of return of 5.34% … it hardly seems worth all the hassle for an extra £147.50 per month with the buy-to-let property (compared to the bond).

However, by using a 75% interest-only mortgage on a 2-year fixed deal at 3.94% (with Mortgage Works) on the same Southampton home, i.e. leveraging (even at today's higher interest rates), the return on the 25% cash invested (£52,500) increases to 9.55%.

If you bought three properties, you would use three-quarters of your inheritance to buy the three properties with 75% mortgages. The monetary return after the mortgage payments would be £15,044 per annum, leaving you £52,500 to more than cover the stamp duty and legal costs.

If you had the cash to cover the stamp duty and legal costs, your return would rise to £20,058 annually if you bought four homes.

Is this return sufficiently higher than your 4.25% threshold to make it worthwhile?

However, most Southampton landlords are primarily motivated by the potential for long-term capital growth rather than rental income. You mentioned the current Southampton market is stagnant, yet as I stated several times in my Southampton property blog, Southampton house prices have upturned recently, and rents are risen like a rocket in the last couple of years.

Of course, there is a risk of Southampton house prices declining significantly since interest rates are rising and we have world events that could change things. However, historically, Southampton property prices have generally outpaced inflation on average by 2.4% per annum since 1975, something a savings bond can never do.

That means that 2.4% needs to be added to the yield for the rent to give you the true return on your rental investment.

Therefore, with an asset that retains its value in real terms, a rental income stream that does the same, and a depreciating debt, the long-term potential of the Southampton buy-to-let properties appears more enticing.

(However, it is essential to note that property values can experience sudden and significant short-term declines – but if you aren’t selling, that doesn’t matter).

If your aim is to contribute to early retirement, you will need to invest your £210,000.

Cash is suitable as a short-term option, but it won’t preserve your purchasing power as time passes.

To generate a real return, you must invest that cash, whether in property, a carefully selected portfolio of stocks, crypto, gold or another investment avenue. There is no definitive answer and seeking advice may be beneficial, but ultimately, the best investment aligns with your comfort level.

The simple fact is that the country is not building enough homes for the people who live here, the people who are living longer and the 600,000+ net immigration we are experiencing. If you are playing the long game, with great advice from an agent and doing your homework - it could be for you.

If you would like any thoughts on this, do not hesitate to reach out and have a chat.

Kind regards

 

Southampton Agent

 

P.S. As with all investments, all income will attract taxation. It would be best to chat with an accountant about that.

𝐖𝐡𝐚𝐭 𝐒𝐨𝐮𝐭𝐡𝐚𝐦𝐩𝐭𝐨𝐧 𝐋𝐚𝐧𝐝𝐥𝐨𝐫𝐝𝐬 𝐍𝐞𝐞𝐝 𝐭𝐨 𝐊𝐧𝐨𝐰 𝐚𝐛𝐨𝐮𝐭 𝐂𝐨𝐧𝐝𝐞𝐧𝐬𝐚𝐭𝐢𝐨𝐧 𝐚𝐧𝐝 𝐌𝐨𝐮𝐥𝐝

How can landlords and tenants combat condensation and mould? Read on to find out.

𝐂𝐨𝐧𝐝𝐞𝐧𝐬𝐚𝐭𝐢𝐨𝐧 𝐚𝐧𝐝 𝐦𝐨𝐮𝐥𝐝

The two are often bundled together because if you’ve got condensation, there’s a good chance it won’t be long before you’re battling mould.

Condensation can be caused by warm air hitting cold surfaces or by lots of humidity in the air. The air cools and droplets form, creating a damp environment – and a perfect breeding ground for mould.

Mould grows in black, green or brown spots. It’s most commonly found in bathrooms and kitchens but can thrive in any damp or humid location.

𝐑𝐞𝐬𝐩𝐨𝐧𝐬𝐢𝐛𝐢𝐥𝐢𝐭𝐢𝐞𝐬

Both landlords and tenants have roles to play in preventing and tackling mould.

The landlord must ensure there are no structural or maintenance issues that could cause mould and remove mould impacting a tenant’s health and safety.

Tenants should keep the property clean and adequately ventilated and report signs of mould to the landlord.

If the cause of mould isn’t structural, it could be down to tenant behaviour (more on this further down).

It’s important to look for constructive solutions to resolve the issue rather than getting involved in a finger-pointing exercise.

𝐒𝐭𝐞𝐩𝐬 𝐚 𝐥𝐚𝐧𝐝𝐥𝐨𝐫𝐝 𝐜𝐚𝐧 𝐭𝐚𝐤𝐞

A dry home with lots of fresh air is the best weapon against mould. To achieve this, you should:

• Ensure the property is well-ventilated.

• Check the heating is working well.

• Insulate the property.

• Look for signs of mould during regular inspections and ensure extractor fans are working.

• Promptly repair issues such as leaky plumbing and guttering, missing roof tiles and damage to the damp-proof course.

• Regularly clear out gutters and drains.

• Act quickly if mould appears. Remove it and apply anti-mould paint.

• Discuss the issue with tenants to raise awareness.

𝐇𝐨𝐰 𝐭𝐞𝐧𝐚𝐧𝐭𝐬 𝐜𝐚𝐧 𝐡𝐞𝐥𝐩

Ask tenants to:

• Avoid hanging clothes to dry indoors with the windows closed.

• Leave a gap between furniture and walls of at least 10cm so the air can circulate.

• Open windows regularly.

• Use the extractor fan when cooking and showering.

• Wipe down wet surfaces such as shower screens and curtains.

• Close the kitchen door when cooking to stop moist air moving to other parts of the property.

• Report signs of mould and any necessary repairs to the landlord or letting agent.

For more advice about managing your rental property, contact us today on 02380018222 or email southampton@belvoir.co.uk

Southampton’s Over-50s Wealth Hits Record High as Generational Property Gulf Grows

The Southampton property market is proving increasingly difficult for some younger Southampton buyers, but mature homeowners have benefitted immensely from rising house prices in the last few decades.

How wealth is spread across the generations will always be a controversial issue, significantly as the Baby Boomers (those born between 1946 and 1964) and the older Gen X's (born in the late 1960s / very early 1970s) wealth has grown exponentially over the last two decades, compared to the wealth of the younger generation.

The over-50s in the Southampton area have a record £5,307,401,294 in mortgage-free equity, twice as much as the total in 2011, underlining the generational gap in the Southampton housing market.

 

Rocketing Southampton property prices have helped mature homeowners more than ever, while high house values and expensive mortgages are pricing out some Southampton first-time buyers. Compared to those younger, the gap is quite stark.

Southampton under-50’s own £559m ofmortgage-free property outright.

 

So, how exactly are properties split in the local area of Southampton, how do they compare to the national figures and more importantly - what can be done about it?

 

For under-50’s in Southampton:

·         4.2% own their own home outright, i.e., no mortgage, compared to 6.4% nationally

·         32.4% own their own home with a mortgage, compared to 41.6% nationally

·         18.7% live in social housing, i.e., council house or housing association, compared to 17.8% nationally

·         44.7% live in private rented accommodation, compared to 34.2% nationally

 

For over-50’s in Southampton:

·         43.0% own their own home outright, i.e., no mortgage, compared to 52.1% nationally

·         19.4% own their own home with a mortgage compared to 21.1% nationally

·         25.4% live in social housing, i.e., council house or housing association, compared to 16.5% nationally

·         12.2% live in private rented accommodation compared to 10.3% nationally

 

The stats that jump out at me in the over-50 age range is over 1 in 10 people nationally are in privately rented accommodation, and over 1 in 5 of over-50s still have a mortgage (although that reduces to 1 in 16 by the time they reach the age of 65).

Campaigners have said the younger generation has been priced out of the property market and the goal of getting on the housing ladder has become an impossible dream for many. The wealth gap of the generations shows the older generations have been aided by increasing house prices, leaving their sons and daughters with few options.

 

So, should the mortgage-free older generation of Southampton feel guilty?

 

Well, I expect the older generation to be mortgage free. It typically takes around 25 years to repay a mortgage fully, and mortgages accumulate over time.

Consequently, it's unsurprising that older homeowners possess higher ownership and equity. Similarly, younger homeowners in the present are likely to accumulate more equity and ownership as they age.

Another intriguing observation is that younger individuals often inherit their properties as older people pass away. With the baby boomer generation experiencing a significant increase in mortality, this transfer of property is expected to occur frequently.

 

Neither should the Baby Boomers and Gen X’s feel guilty. Many can remember mortgage rates at 16% in 1992.

 

Also, older Southampton people faced more significant difficulties in obtaining mortgages when they were younger. They encountered strict caps on mortgage sizes and had to contend with considerably higher interest rates.

Additionally, the older generation in Southampton tended to lead more austere lives in the 1960s and 1970s and saved more money.

When housing construction and supply were relatively robust, demand was constrained during that period. Consequently, Southampton house prices were significantly more modest than today's soaring prices.

The present situation reflects the last three decades of stringent house-building restrictions imposed by every political party, combined with a flood of inexpensive money from the banking system since 2008 and substantial immigration (who also require housing and age over time).

 

As a result, an inevitable surge in British house prices has occurred.

 

Today, younger Southampton people tend to delay marriage, postpone having children and pursue higher education. As a result, they enter the housing market at a later age, but they generally express contentment with this arrangement.

As I said recently in my Southampton property blog, first-time buyers have been on the rise lately, albeit their average age is now 33.4 years old (compared to 30.6 years old in 2005 and 23.6 years old in the 1960s), meaning they won’t be paying off their mortgage until later in life.

 

What could be the answer(s) to help solve this issue in the Southampton property market?

 

One is to build more houses – and that requires a willingness as a society to build on land that many might not want to build on (a political hot potato at the best of times!).

Secondly, we need to help older Southampton homeowners to downsize, freeing up their larger homes for younger generations.

 

Most over-50s live in average-priced family properties with no enticement to downsize.

 

Their children have flown the nest, and they rattle around a house often too big for them (as I discussed a few months ago and many have homes with two or more spare bedrooms). This country requires more bungalows and suitable houses for mature homeowners' lifestyles.

As a society, we need a discussion between the generations on how the £3 trillion of mortgage-free equity tied up in property owned by those who are 50 years old and above can be used to help the younger generation (i.e., their children and grandchildren), theoretically improving their prospects of affording their own home.

These are interesting times ahead. What are your thoughts on the matter? Do share your thoughts in the comments.

Southampton First-time Buyers Keeping our Local Property Market Afloat

The Southampton housing market is relativity buoyant, thanks to an unexpected group of people – Southampton first-time buyers.

Many Southampton tenants are annoyed with competing for Southampton rental properties at high rents. Therefore, over the last 12 months, many renters have been stretching their finances to get on the Southampton housing ladder, despite sky-high mortgage rates.

 

Using data from the Office of National Statistics, Land Registry and the Bank of England …

 

of the 4,479 properties bought in the last 12 months in the Southampton area, 1,214 were bought by first-time buyers.

 

With just under 1 in 3 house purchases made by first-time buyers in the last 12 months, it might surprise many that this has been steadily growing since 2010 when only 1 in 5 house purchases were made by first-time buyers.

Surprisingly, first-time buyers have remained the most resilient group of property buyers, even during these difficult times.

Usually, first-time buyers would be the most affected in times of stress in the property market (like in the last two property market crashes of 1998 and 2008). However, this time is different. Despite the sky high mortgage rates, the rental market and its high rents are making buying a more attractive option for many Southampton renters.

In Q1 2021, the average rent in the Southampton area was £934 per month.

 

The Southampton area rental market has experienced soaring rents in the last two years, with the average rent increasing to £1,151 a month in Q1 2023, an increase of 23.2%.

 

(Southampton area being SO14-SO19).

There are multiple reasons why rents are rising.

One reason includes higher mortgage rates for landlords, passed on to tenants in increased rents.

Some Southampton landlords with high % mortgages are selling their buy-to-let portfolios because of the Section 24 taxation rule changes and leaving the market entirely. Another reason is fewer landlords are buying rental properties to let out, with only 1 in 8 house purchases being made by landlords.

Meanwhile, demand for Southampton rental properties is high.

With demand outpacing supply, some Southampton renters are forced to accept higher prices or offer more than the asking price to secure new tenancies.

 

Other Southampton tenants are offering to pay six to twelve months rent in advance to strengthen their negotiating position.

 

This situation has made many Southampton renters move forward with their plans to buy a home for themselves, despite the increasing costs of home ownership.

But what about the deposit?

It appears the ‘Bank of Mum & Dad’ are helping first-time buyers with their deposits. The national average deposit paid by first-time buyers was just over £63,000 in January '23, which was 23.4% of their purchase.

The lowest rate for a two-year fixed first-time mortgage with a 23% deposit is 4.13%, up from 2.86% a year ago.

So, how can Southampton first-time buyers reduce their monthly payments? They can do it by increasing the length of their mortgage. For example, increasing your mortgage term from 25 to 30 years will save you £45 per month in mortgage payments for every £100,000 borrowed.

 

Eleven out of twenty first-time buyers are taking out mortgages of 30 years or more, the highest level since records began in 2005.

 

But what about those buyers with a low deposit?

According to the Moneyfacts website, the number of available 95% mortgage deals has risen from the early 160s in early March to nearly 210 last week. This is the highest level since September 2022, showing that banks are not worried about a property price crash. Moreover, the Coventry and Nationwide Building Societies have reduced their mortgage rates on low deposit (90% to 95%) mortgages over the past few weeks. The average 2-year fixed 95% mortgage is 5.64%, and the best rate is 4.9%.

However, Skipton Building Society has even launched structured products for certain first-time buyers that will not need a 5% deposit if the buyer can prove their rental history (about time too if you ask me).

The government mortgage guarantee scheme was also extended into 2023, which partially insures the bank/building society on any defaults on their 95% mortgages. It has been recognised for keeping some of these low deposits available for first-time buyers.

 

The outlook for the Southampton property market is uncertain, but a comparatively soft landing is still the most likely outcome.

 

With first-time buyers fuelling the market, interesting times lay ahead!

These are my thoughts, do share yours.

Southampton Homeowners Worried About the Property Market? The Latest Quarterly Data Might Surprise You!

In my articles on the Southampton property market, I like to provide an insight into the real story of what is happening in our local (and national) property market and address the misconceptions that some of the media have been spreading.

Despite almost daily reports of a housing market crash since September 2022, the data shows that the UK (and Southampton) property market is gingerly doing OK.

So, let’s dive into the stats and start with the life blood of the housing market – new properties coming on to the market.

Nationally, 407,946 UK properties came onto the market in Q1 2023.

(Q1 = Jan & Feb & March)

Interesting when compared to the 7-year average (2017 to 2023 inclusive) of 403,105 new properties on the market in Q1.

New properties coming onto the market are a critical bellwether of the property market.

If we had a situation like 2008, where the number of properties coming on the market in 2008/9 was double that of 2007, supply outstripped demand and hence economics dictated and house prices fell.

 

The balance of houses coming on the market and how many sell determine what happens to property prices.

 

So how do you know if we are heading for another Southampton house price crash as we did in 2008 or not, as the case maybe?

Let me share a quick and easy way to find out before anyone else.

Firstly, do a Rightmove search on your chosen property market and map the number of properties for sale every week. Next, do the same search, but this time include sold subject to contract properties. This will show you can see how many properties are available and how many sold subject to contract (stc). The third step is to calculate the ratio between the first two numbers: i.e., what’s available versus what’s been sold.

If the ratio of sold property to available property rises monthly, the market is improving. If the ratio is falling, the market is slowing.

If you really wish to go deep into this; you could split the search into property type (and bedrooms) you are selling and buying e.g., detached, semi, terrace or flats. This will help you to judge demand and supply and time the market to your advantage.

 

Next, looking at house sales nationally, 276,482 properties sold (stc) in Q1 2023.

 

However, the devil is in the data. The 276,482 properties sold stc is not very good when compared to the 7-year Q1 average (2017 to 2023 inclusive) of 306,532.

Yet that average includes Q1 2021, where 397,402 properties had sold stc and Q1 2022 when 341,888 properties sold. Both of those years were exceptional; however, when we compare Q1 2023 to the Q1 average of 2017/18/19/20, a more reasonable 282,488 houses were sold on average.

Next, I wish to look at what is selling nationally by price band.

 

Nearly half (44%) of all the properties sold in the UK in Q1 ’23 were £250,000 or less, yet only just over a third of the homes (36%) that came on the market in the UK in Q1 '23 were £250,000 or less.

 

The lower end of the property market is performing better than the higher end.

Looking locally at the Q1 stats, starting with the number of properties in the Southampton area (SO14 to SO19) that came onto the market in Q1 2023…

 

1,387 properties came onto the market in Q1 2023 in the Southampton area.

 

The average price of those Southampton properties coming to the market was £287,195.

The price range/band that saw the most listings was the £250k to £300k range, where 287 Southampton area properties came to market.

Now, looking at sales in Southampton…

 

1,092 properties were sold in Q1 2023 in the Southampton area.

 

The average price of those Southampton properties selling was £269,235.

The price range/band that saw the most sales was the £250k to £300k range, where 256 Southampton area properties were sold.

 

Typical first-time buyer properties are leading the recovery.

 

Although economic turbulence remains, the property market is gradually moving towards pre-pandemic activity levels.

The national sales agreed in this lower price band are unexpectedly recovering the fastest. However, larger, more expensive home sales are lagging (e.g., 8.5% of listings in the UK in Q1 '23 were in the £750k to £2m price band, yet only 6.4% of the sales were in the same band). The £2m+ price range, even though the numbers are quite small, the difference is quite startling (1.2% of listings were £2m+, but only 0.6% of sales agreed were in the same range).

The average mortgage rates fell back from their peak last year, with the best rate for a 10% deposit five-year fixed mortgage now 4.6%, compared to last October at 6.62%.

However, this isn’t as good as the 10% deposit 5-year mortgage at 1.64% in January 2022.

So, what does this all mean for homeowners wanting to sell in this market?

Realistic pricing when you put your house on the market is everything!

 

In Q1 2023, there have been 243,602 price reductions on the 590,481 properties on the market, compared to 119,068 price reductions in Q1 2022 on 424,796 properties on the market.

 

It is better to come on the market at a realistic price to start when the property is fresh to the market, than go on at a high price, lose that initial honeymoon period and then reduce it, only for some people to wonder what was wrong with the property.

The Southampton property market is seeing stability and confidence return as it recovers from the turbulence at the end of 2022. The pace of the market had reached an unsustainable level in the last two years, and it was on track to slow to a more normal level.

The reaction to September's mini-Budget accelerated the speed of this slowdown.

Although higher mortgage rates and economic headwinds present challenges, many potential home buyers who were effectively sidelined in the fierce bidding wars of the last two years will find that a slower paced property market gives them time to plan a strategy for their next move as we go into the traditionally busy post-Easter house buying season.

 

While the demand for quality Southampton houses is still healthy, if the asking price is above the current market, sellers may need help finding buyers.

 

Determining a realistic price is crucial but not easy. Many sellers look at similar properties on property portals, but those prices may be over-inflated.

Estate agents have more tools at their disposal, such as comparing sale prices for comparable properties and thinking about prospective purchasers in the market for the type of property under valuation.

Although getting the price right can be difficult, revising it downwards quickly is essential.

Sellers should ensure that their property looks better value for money than similar properties. If you plan to trade up, it is good sense to sell at realistic prices, as you will gain substantial savings compared to moving in the last few years.

However, if you don't need to sell urgently, becoming a landlord could be an option - again I can help on that if needs be. Nevertheless, homeowners-turned-landlords should consider that if property values do drift downwards in the coming 12/18 months, it may take a few more years after that to recover to those values seen last year.

 

Whatever the rest of 2023 brings, moving home should mostly be based on your circumstances and not solely on what is happening to Southampton property prices.

 

If you would like an informal chat about your potential move without any obligation or cost, get me around for a chat. I promise I will tell you like it is, without any guff – then you can decide what is best for you and your family.

In the meantime, do let me know your thoughts in the comments below.