Now that we are in February, the St Albans (and British) property market is full of mixed messages. Whilst the Bank of England has increased the base rate ten times since 2022 taking it to 4% (3.5% higher than 12 months ago), mortgage rates are now dropping. The St Albans property market rocketed over the last few years because of the imbalance of the number of properties for sale versus the demand, with many more people looking to move home than there were properties available.
A split market?
As we step further into 2023, we are experiencing a steadier St Albans housing market but there is one big thing I have noticed – the imbalance of what is coming on the market for sale versus what is selling. For example, 38.2% of properties that came on the market nationally in November and December 2022 had an asking price of £250,000 or less. Yet, in the same price bracket the percentage of properties sold subject to contract since 1st January 2023 was 45.6%. The same pattern is seen in the higher-priced St Albans properties which are selling more slowly than the lower-priced ones. Therefore, the need for those larger properties to be more realistic in price is paramount to stand out from the crowd.
How will this impact the market?
Additionally, evidence suggests there is a growth of St Albans buyers who are looking to find a home before putting theirs onto the market and as the St Albans property market returns to normality, this will be seen more and more. In fact, I expect to see the time it takes to sell a St Albans home increase from 44 days in 2022 to a more ‘normal’ housing market of around 65 days.
The increasing importance of EPCs
A greater number of larger homes in St Albans are coming on the market because of the higher number of mature homeowners looking to downsize. Larger homes have become much more expensive to run and as many of the occupants are on fixed incomes with their pensions, they are downsizing to cut costs. More and more buyers have started to ask about a property’s Energy Performance Certificate (EPC) rating. I recommend to St Albans homeowners considering moving in the spring or summer to have an EPC done on their property now, as there may be points that could easily be rectified and improved from one EPC rating band to another.
What is happening in the St Albans property market now?
For properties sold STC, there have been 143 properties since 1st January 2023, with the £600k to £750k price range the most active at 36 – this represents 25.1% of sales. For properties coming onto the market, 236 properties have listed since 1st January 2023. Yet the price range with the most properties is the £750k to £1m range. Again, this backs up the idea that the lower to middle sector of the St Albans property market is where the sales are, but the properties coming onto the market are slightly higher in price.
A return to ‘normal’?
I know the prices being achieved for homes in St Albans in the spring of 2022 (when everyone was out bidding each other) are not being achieved today. It all depends how you look at it. Are St Albans house prices dropping or are they just returning to normal? Potentially the latter. If we look at just house price movements as a ‘bellwether’ for the health of the St Albans property market this has flaws. Many economists and property market commentators believe transaction numbers (the number of properties sold) give a more accurate and truthful indicator of the property market’s health than just house values alone. Firstly, most people also buy a home when they sell their own, so if St Albans property values drop by 5% or rise by 5% on the one you are selling, it will do the same on the one you are buying.
A dipping market an opportunity to add value?
Most people move up market when they do move home, so if the price of the one they’re selling is lower that what would’ve achieved in 2022, the price that they will pay on the one they want to buy will also be lower. But it will cost less to move! For example, last year, your St Albans home was worth £400,000 and the one you wanted to buy was £750,000. Let’s say St Albans house prices did drop 5% in 2023; your home would now be worth £380,000. Yet the one you want to buy would now be worth £712,500. So last year, it would have cost £350k to move, whereas now the move would cost £332.5k, saving you £17,500.
An unquantifiable factor
Third and finally, moving home is a human thing. Property habitually delivers a robust emotional connection with homeowners – a connection that few would attribute to their other investments like stocks & shares or savings accounts. Moving home could be described as a human journey, moving from one chapter of one’s life to another. Therefore, when people do move home, it shows they are moving forward in their lives, which gives an interesting indicator of the property market’s health.
In summary
It’s going to be an intriguing year for the 2023 St Albans property market, but my feeling is, the 30% price drops first bandied around in September last year will not play out and a more settled environment will emerge.
