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Price Reductions – When? How? Why?

Posted on by prateek

Did you know that 1 in 10 Home Sellers in Bath Lower Their Asking Price Every Month?

As the property market continues to evolve here in the city of Bath, it is important for estate agents such as ourselves to better understand the complexities of the market. For readers, it is also important you keep up-to-date with all the going on in our property market. This can be easily achieved by following our blog, and our social media channels.

Recently, homeowners in Bath who have found themselves on the market for a long period of time are navigating the complex decision of how and when to reduce their asking prices to better attract a buyer.

With an increasing number of properties coming to the market here in Bath (1,217 on the market in August 2024) the competition is becoming increasingly competitive meaning strategic price adjustments are more crucial than ever.

MASTERING PROPERTY PORTAL PRICE BANDS FOR OPTIMAL EXPOSURE

Understanding and utilising property price bands on the ‘portals’ (Rightmove, Zoopla, OnTheMarket) can significantly enhance the visibility of your property listing. These bands are predefined price ranges buyers often use to filter their search results. Positioning your property’s asking price in one of these bands will strategically draw in more views and therefore there will be more interest in your property, which in turn will lead to more viewings and ultimately increase your chance of selling your property.

For instance, pricing at £300,000 instead of £295,950 will place your property in a filtered search of properties between £280,000 – £300,000 & £300,000-£320,000 so you will have a chance at attracting a broader audience.

THE IMPORTANCE OF RIGHTMOVE ALERTS

A critical factor in the timing of price reductions is their impact on buyer visibility. Homeowners need to reduce their asking price by at least 2% to ensure their property reappears in Rightmove and OnTheMarket’s email alerts, while for Zoopla it is 3%, capturing the attention of active buyers.

THE CURRENT STATE OF PLAY IN THE BATH PROPERTY MARKET

In 2022, there were an average of 77 price reductions a month in the Bath area, today it’s 116 per month. The average Bath price reduction in the last 3 months was 7.1%. So, the statistics show that whilst the number of properties coming to the market is on the rise the number of price reductions has increased. In fact, the percentage of Bath properties undergoing price reductions has remained roughly consistent in recent years, with an average of 1 in 10.1 Bath homes (9.9%) reducing their asking price each month over the last five and a half years.

THE IDEAL PRICING STRATEGY FOR HOMES IN BATH

The initial pricing strategy plays a pivotal role in the speed and success of your property sale. Bath properties that get priced too high at the onset tend to stay on the market for longer and eventually require a more significant price reduction to generate new interest. By contrast, homes are priced realistically from the beginning (Click Here to find out more about the importance of pricing correctly), are far more likely to attract offers quicker and reduce the need for substantial price cuts.

For Bath sellers wanting to initially start at a ‘cheeky’ higher price, you need to be prepared to reduce this price if there is little to no initial interest. In these cases, a reduction within the first 2-4 weeks of being on the market is advisable and will help prevent stagnation in the market.

SIX THINGS TO CONSIDER FOR A PRICE REDUCTION

So, your property is on the market. It has been a few weeks and you’re wondering if you should be reducing the price. Well, here are six tips to look out for as signs you should be thinking about reducing that asking price:

  • A LACK OF VIEWINGS

If you haven’t received many viewings in the initial few weeks since listing your property, then it is advisable that you go and first look at your property listing and check that the marketing photos are up to standard for the area and are making your property stand out, maybe even check if your agent is willing to offer a virtual tour on your listing page (we certainly do). If you feel that the marketing material for your property is up to standard, then maybe it is time to consider a price reduction to attract new interest and boost your property on the portals.

  • VIEWINGS…BUT NO OFFERS

The current ratio in the UK property market of viewings to offers is around 8:10. If your property has not received any offers within the first 30 days of being on the market with your estate agent, despite there being plenty of viewings, then it could be that the price is a sticking point for potential applicants. If this is also the feedback your agent is getting then maybe it is also time to consider reducing the price closer to your bottom line.

  • LOW OFFERS

Homebuyers will often make low-ball offers primarily to secure the best deal possible they can for the budget they can afford. However, there can be numerous reasons. One key factor is the current market conditions – In a Buyer’s Market (more homes available than buyers) the purchaser feels that they have more power to make a low offer as the seller will be fighting other sellers to sell their house first (To find out more about Bath being a buyers or a sellers’ market, click here). Another reason for low offers is the condition a property presents itself. If a buyer feels they will need to be spending a fair amount of cash on renovations and decorative work to get it up to a standard they deem fit, then they are far more likely to take this cost into account and offer low. If you are getting low offers, remember it is not worth the value YOU think it is worth, or what your agent thinks it is worth, it is worth the value someone is willing to pay.

  • MARKET SATURATION

Look at the number of Bath homes that are on the market similar to your property, and check to see if you stand out from the other listings. Check on those properties similar to yours that sold too. Adjusting your price in line with the level of saturation in the market and how those properties that sold is crucial for selling your own.

  • SEASONAL ADJUSTMENT

Be mindful of seasonal trends within your local property market. Periods of high market activity require different strategies from the slower months of say November and December.

  • FEEDBACK FROM VIEWINGS

If there is consistent feedback from viewings that your property requires some work in the majority of people’s eyes, or that the price is just too high for what’s on offer, then you need to be looking at adjusting your asking price.

LEVERAGING EXPERT ADVICE

Given the Bath property market is full of many complexities, seeking out a second opinion and advice is nothing to be worried about. Experts such as ourselves are happy to help you out and offer you advice, it is what we are here for. So, if you just want another valuation or you want some advice about switching agents and lowering the asking price, then do not hesitate to get in touch with our team.

To view our latest Sales Properties in Bath, click here – Properties for Sale in Bath (residebath.co.uk)

To view our latest Rental Properties in Bath, click here – Properties – Reside Bath

For more from Reside Bath: Lettings and Estate Agency, click the icons below!

‘OVERVALUING’ – HOW IT CAN AFFECT YOUR HOUSE SALE IN THE BATH PROPERTY MARKET

Posted on by prateek

In the last 5 years, 7,149 homeowners looking to sell in Bath have been caught out by estate agents overvaluing their property. Now, understandably, if you have considered selling your property then you will have felt the temptation to list it at a higher price hoping to maximise your sale. After all – who wouldn’t want to maximise their return on their investment?

However, this approach has a downside that many have overlooked: the risks and costs associated with overpricing/valuing a property. So let us dive into why correctly pricing your property is essential to secure a smooth, quick, and profitable sale for your home here in the city of Bath.

A COMMON PITFALL IN BATH’S PROPERTY MARKET:

In recent years, the Bath property market has seen a surge in home prices, leading to fierce competition among estate agents. During the peak of the market in 2021, many estate agents in Bath achieved top prices for properties, often receiving multiple offers in a matter of days. This quick time to sell was likely brought about by the desire for those to move out of metropolises such as London due to the pandemic and move to a quieter area with more space for their money. However, this quick time to sell and above-average pricing came with unintended consequences.

As fewer homes in Bath came onto the market after this boom, agents became desperate to secure listings. So, to secure potential sellers, many agents began over-pricing properties. This ‘overvaluing’ has led to delays and distress for many Bath homeowners as their property is then in turn not attracting as much attention as they thought it would leading to a significantly increased sale time and often a price reduction.

THE IMPACT OF OVERVALUING – LONGER SALES TIMES AND INCREASED RISK:

So, why are so many properties in Bath still on the market after a prolonged period of time? Often it all comes back to this concept of ‘overvaluing’. When a property is priced too high, you don’t attract serious buyers. Instead, your property sits on the market for an extended period, leading to frustration for both homeowner and agent and ultimately these properties end up being taken off the market unsold.

So, let’s look at the statistics:

Since 2019, in the regions of the BA1/2 area –

  • In 2019, 46.7% of the 3,693 properties that left Bath estate agent books, exchanged and completed.  The remaining 1,970 (or 53.3%) Bath homeowners came off the market unsold.
  • In 2020, 69.4% of the 3,116 properties that left Bath estate agent books, exchanged and completed.  The remaining 1,430 (or 45.9%) Bath homeowners came off the market unsold.
  • In 2021, 69.4% of the 3,254 properties that left Bath estate agent books, exchanged and completed.  The remaining 996 (or 30.6%) Bath homeowners came off the market unsold.
  • In 2022, 72.1% of the 2,885 properties that left Bath estate agent books, exchanged and completed.  The remaining 805 (or 27.9%) Bath homeowners came off the market unsold.
  • In 2023, 59.2% of the 2,815 properties that left Bath estate agent books, exchanged and completed.  The remaining 1,148 (or 40.8%) Bath homeowners came off the market unsold.
  • In 2024 (YTD), 57.4% of the 1,877 properties that left Bath estate agent books, exchanged and completed.  The remaining 800 (or 42.6%) Bath homeowners came off the market unsold.

THE HARD DATA ON OVERVALUING:

Now, you could reduce your asking price after three or four months to make your home’s price more realistic and affordable. This is certainly an option, yet because homes that sit on the market for too long often develop a negative reputation, potential buyers will end up asking themselves why the property has been on the market for so long and if there is a ‘hidden issue’ in the property that is causing it to not sell – essentially buyers automatically assume something is wrong with the property and get deterred.

As a result, even when the price is eventually lowered, as reported a few years ago, the property is likely to sell for less than it would have if it had been priced correctly from the beginning.

Recent independent research from TwentyEa and Denton House Research, that a UK home that takes over 100 days to sell (i.e. more than 100 days between coming on the market and agreeing on a sale) has only just over a 1 in 2 chance (56%) of successfully exchanging and completing the sale. The remaining 44% of sales fall through.

In contrast, if a property has its sale agreed in under 25 days, the chances of exchanging and completing rise to 19 out of 20 (94%). That’s a significant difference!

THE IMPORTANCE OF GETTING THE CORRECT PRICING ON YOUR HOME IN BATH:

So, what can you do as a homeowner to make sure you don’t fall into the overvaluing trap? The key is to ensure that your Bath home is priced correctly from the outset. Here are a few tips that should help you achieve this with your agent:

  1. GET MULTIPLE VALUATIONS: Now this may sound backwards coming from a local estate agent. However, do not rely on your first appraisal. Ask several agents for a valuation and compare the suggestions. Then, choose which agent you think will work best for you and your property. We would love for you to choose us so if you are interested in getting a valuation then click here. Our team have been working in the City of Bath for over 15 years and our property consultants are locals to the area having grown up here, so our wealth of knowledge is plentiful!
  • UNDERSTAND THE CURRENT MARKET CONDITIONS: The property market is constantly changing. The highs of the 2021 post-pandemic property market have now cooled off, so make sure you are getting a valuation that reflects current market conditions. It is also a good idea to follow local agents. You can keep up to date with the latest on the Bath property market from Bath’s newest Estate Agents here – or you can follow us on our social media pages found in our linktree.
  • WORK WITH AN AGENT YOU TRUST: Choosing an agent that is a good fit for you is crucial. Look at how they market properties, do they have a good reputation and whether they will do what is in your best interest, not just theirs. If you want more information about our sales services, then Click here.

FINAL THOUGHTS:

Overvaluing might seem tempting – but the risks far outweigh the potential rewards.

Not only does it result in longer sale times, but it also decreases the likelihood of a successful completion. By pricing your Bath home accurately from the start, you can increase your chances of getting a decent price and a smooth and profitable sale.

Remember, the goal isn’t just to sell your Bath home – it’s to sell it for the best price, within the best time frame, to a serious and motivated buyer. By working with an experienced and honest estate agent, you can avoid the pitfalls of overvaluing and achieve the successful sale you deserve.

If you have any questions or would like more advice on selling your Bath home, check out our dedicated sales page for both Buyers and Sellers – and always feel free to pop into our office or give us a call.

THE NEED FOR REALISTIC PRICING  – A CLOSER LOOK AT THE BATH MARKET DYNAMICS (2019-2024)

Posted on by prateek

The Bath Property market has undergone significant changes over the past few years, as depicted in the graphs below. These visual aids capture the trends in the number of properties available for sale and the number of properties sold subject to contract (SSTC) from January 2019-2024. By analysing these graphs, we can gain insight into the evolving dynamics of the local property market and the necessity for Bath homeowners to adopt realistic pricing strategies when bringing their homes to market.

A CLOSER LOOK AT THE BATH MARKET DYNAMICS (2019-2024) –

From January 2019 to February 2020 (a normal market), the number of properties for sale in Bath remained relatively stable, at an average of 1,278 homes (bath being BA1/2). This pre-COVID period also showed a steady number of properties being sold each month, with an average of 181 home sales. This indicated a balanced market where the supply of homes was more or less matched by buyer demand.

The Bath property market underwent a noticeable shift with the onset of the COVID-19 pandemic in late March 2020. As the pandemic gripped the nation, the number of properties that sold in April and May 2020 plummeted sharply. This was due to the uncertainty brought about by the pandemic. Many buyers held off amidst the uncertainty.

However, the floodgates opened once the property market lockdown was lifted in May/June 2020. The number of properties coming onto the market between June and August 2020 rose by 27% above the long-term average for that time of year, and the number of homes selling also rose.

In Bath, in the 20 months between May 2020 and December 2021, the average number of Bath homes sold per month was 245, with the biggest month being 342 homes Sold Subject to Contract (SSTC). However, the number of homes for sale slowly dropped throughout the period to an all-time low of just 540 homes for sale in December of 2021.

What stands out during this period is that despite the reduced number of Bath properties for sale, the number of properties sold remained robust. This surge in demand, despite a drop in available Bath homes, can be attributed to the combination of pent-up demand and the government’s intervention in the property market. Most notably the stamp-duty-holiday incentivised buyers to move quickly before the levy was lifted.

As the dust settled moving into 2022, the property market began to feel as it was coming back towards and ‘normal’ market. The number of homes selling settled down and the general level of properties for sale steadily began to rise. However, as we ended the summer of 2022, the property market was struck twice within a span of 12 months.

The first hit on the market came in the spring of 2022 when then Prime Minister, Liz Truss and her chancellor Kwasi Kwarteng, produced their now infamous mini budget. Following this, there was a five-month period dropped, stooping to an average of 140 sales per month. It started to recover in the spring of 2023, as home sales rose to an average of 223 sales per month, only to be hit again when the increasing interest rates started to really bite in the summer of 2023. Home sales then slumped to 181 sales per month during the summer of 2023.

NUMBER OF BATH HOMES FOR SALE AFTER JANUARY 2024 –

Since January 2024, the number of Bath homes selling has been at an average of 218 homes per month. However, the number of homes for sale has steadily risen to 1,213 in August 2024 alone. The significant increase in supply could be due to various factors, including homeowners taking advantage of high property prices at the moment, an increase in new builds, or even a growing number of properties that failed to sell in previous months/years now being re-listed with a new agent.

PERCENTAGE PROPORTIONS: BATH VS. UK TRENDS –

The second graph below delves into the dynamics here by comparing the same set of numbers to each other and expressing them as a percentage.

By doing this, we can see the proportion of monthly homes sold relative to the number of properties available. This yellow line on the graph represents the % of Bath properties sold SSTC during the month as a proportion of the homes for sale. The red line shows the equivalent figure for the UK average.

The graph reveals important information. Throughout 2020-early 2022, the proportion of UK homes sold in Bath (yellow line) spiked into the mid to high 30% range. This aligns with the earlier observation that despite fewer homes being available, a higher percentage of these homes were being snapped up quickly by buyers wanting to make the most of the government intervention following the pandemic.

However, as we moved to 2022 and beyond, this trend began to reverse. The proportion of homes sold (as a percentage of homes for sale) in bath started to decline and now the figure stands around the mid-teens.

SO, WHAT DOES THIS MEAN FOR BATH HOMEOWNERS? –

The stable number of home sales against a backdrop of increasing supply could be signaling that there is a potential issue. The market may be approaching a tipping point where supply outsees demand and thus prices begin to fall as the market becomes a buyers’ market and there are more options for buyers. This increase in supply means those serious about getting a sale need to make sure they are getting their homes valued and listed at a realistic price mark. Pricing too high in this market will lead buyers to be deterred by other options they have available with such a high supply.

A price too high in this market will lead to long listing times, and price reductions, both of which can deter some buyers as they may assume this is due to an unforeseen issue within the property. Neither of these are wanted by sellers so it is critical that you get that listing price correct.

Also, remember that a longer listing time means that a sale is more likely to fall through, even if a sale is agreed upon. Looking at an examination from Denton House Research using data from TwentyEA, they noted that if a UK home sold within 25 days of the property coming to market, there was a 94% chance of the sale going all the way through to completion. If the sale was agreed upon over 100 days after it was listed on the market, then the chances of actually completing the sale is reduced vastly to 56%.

IN CONCLUSION –

Whilst the Bath property market remains active, ‘this has introduced a new challenge for sellers. To achieve a successful sale, Bath homeowners must pay close attention to market trends and set their prices accordingly. Realistic pricing and an understanding of the broader market dynamics will be vital in navigating this evolving landscape. As the data suggests, the market is still healthy, but the balance of supply and demand is shifting which is making strategic pricing is more critical than ever.

RENTERS’ RIGHTS BILL UPDATE – WHAT BATH LANDLORDS NEED TO KNOW.

Posted on by prateek

On Wednesday, Parliament had the first hearing of the Renters’ Rights Bill, the revision by Labour of the previous government’s Renters Reform Act. There was a lot of information given during the hearing so let’s take a moment to take a look at what this could mean for your investments in the future.

Let’s begin by reassuring you that nothing groundbreaking was heard in these proposals that will catch you off guard. Most of what was heard was already in the previous bill by the Conservative government. Regardless, let’s break down what was involved and what might affect you as a Bath Landlord going into the future.

THE END OF SECTION 21 (‘NO FAULT’) EVICTIONS:

The big headline in the news outlets was the abolition of Section 21 evictions. For years now, landlords have been able to issue a section 21 notice, which gives tenants two months to leave the property through no fault of their own. Many have viewed this as unfair, particularly when they have been used to displace tenants who challenge landlords’ provision of poor living conditions or challenge rental increases they deem unfair.

Landlords won’t be without power. You will still be able to evict tenants who break rules under Section 8 of the Housing Act. This will cover situations such as failure to pay rent, damage to the property, and antisocial behaviour. The main difference here between a section 21 and a section 8, is that the latter requires a court order. The concern here is that in recent years these court orders have faced significant delays. However, the government has assured us that they will work to clear the backlog and streamline the process.

RENT INCREASES AND BIDDING WARS:

Another important point heard on Wednesday’s hearing was the ban coming in on bidding wars. Over recent years, some cities have seen an influx in rental bidding wars. This has been caused by over-demand and under-supply, which has then led to two people trying to offer more than the other over the asking rate of rent and leading to ‘a bidding war’. This new piece of legislation will make it illegal to ask or accept any offers from potential tenants over the advertised rent. This may stabilise the market, but it is something to keep in mind when setting rent prices for your Bath rental property.

In addition, in-tenancy rental increases will be limited to once a year and will no longer be allowed during the period of the fixed term of a tenancy. Whilst this ban may seem restrictive, it does provide a sense of stability for tenants and in turn may encourage longer-term lets.

ENERGY EFFICIENCY AND PROPERTY STANDARDS FOR BATH LANDLORDS:

 This proposed act introduces a stricter regulation on the quality and energy efficiency of rental properties. By 2030, landlords will need to ensure that their properties are given an Energy Performance Certificate (EPC) rating of C or above. (For more information about EPC Certificates see this article: How will the new EPC rules affect Landlords? (residebath.co.uk)). This is a long-term requirement, so although it may require investment at first, there is plenty of time to plan these changes, check the regulations, and plan accordingly.

The introduction of the Decent Homes Standard into the private rental sector means that Bath Landlords will also need to ensure their properties and maintained to a certain standard. This will particularly look at hazards such as dampness and mould, a common issue among Bath properties in particular. It is a move that is aimed at improving the overall quality of rental accommodation and whilst it may mean more responsibility for more landlords across the city, most landlords will already be meeting these standards.

GOING FORWARD:

If any one of these proposed changes is causing any concern then do not hesitate to get in touch with our team, we would be happy to help you understand these changes further. Being a team in Bath affiliated closely with the governing body, Propertymark, we are continuing our professional development and are constantly keeping up to date with the latest changes. Do also keep an eye on this blog page which is continually updated with all the latest news in the property industry here in Bath and beyond.

ANALYSIS OF TRENDS IN UK PROPERTY OWNERSHIP BETWEEN 1918-2023

Posted on by prateek

This week’s blog is a mini post – just a quick filler for your property fact needs! So, without further ado, let’s get into the shift in property ownership trends over the last 100 years or so.

The UK property market has seen significant changes over the last century. Over this time, there have prevailed some distinct trends among owner-occupied properties and both private and socially rented homes.

In 1918, the UK market was dominated by private renters, making up 75% of all households. At the time there was only 25% of the population who owned their own home. Over the coming decade, homeownership gradually increased, reaching 38% in 1958. This shift was then accompanied by a decrease in private renting, which fell to a low of 41% in the same period.

The most significant growth in homeownership occurred between 1958-2003. During this time, the % of ownership went up from 37% to 70%. This period also saw a corresponding decline in both private renting and social renting, declining to 8% and 22% respectively.

Interestingly, the trend for private renting was reversed around the time of the global financial crisis (2008/09). This led to a 2% growth in private renting between 2003-2008. This growth trend has continued as the population has expanded and has now reached 20% in 2023. The resurgence in the private rented sector can be attributed to not only the increase in population causing a larger demand for housing but also relative affordability and government policy shifts.

Meanwhile, the social renting sector has seen a gradual decline since its peak in the late 1970’s. Over the recent years, this figure has stood around the 18% mark, compared to the 29% seen in 1978.

To summarise, the UK property market has evolved significantly over the last century. The initial dominance of private renting has given way to an increase in homeownership, although recent years have seen renewed growth in the private rental market.

As a local property agent here in Bath, it is important that we recognise how these trends impact homeowners, renters and landlords alike. Understanding these trends allows us to help make informed decisions on the current landscape and provide the best advice possible. So, if you want to find out more then get in touch with our team! We are always happy to help you find your new home!

Where are the cash buyers? – A look into Baths Property Market.

Posted on by prateek

The UK property market has undergone significant shifts since the summer of 2020. This has been driven primarily by the post-lockdown ‘rush to move’ after everyone who’d been stuck inside for 3 months felt they had ‘outgrown’ their homes and were further incentivised by the stamp-duty levy.

Following this rush to move, there have been significant interest rate hikes aimed at curbing inflation in 2022 & 2023. These changes have had far-reaching implications across the property market and have had a significant impact on both house prices and the overall volume of property transactions.

INTEREST RATE SURGE AND ITS IMPACT:

The initial wave of interest rate hikes began in November 2021, as the Bank of England (BoE) sought to counter the ever-rising inflation post-lockdown, and this continued until the summer of 2023.

There were 14 rises in interest rates during this period – the culmination of which was a peak rate of 5.25%. The Bank of England’s decision to implement such a rigorous monetary policy stemmed from concerns about the rapidly escalating cost of living (now dubbed the ‘cost of living crisis’), the consequence of both domestic and global pressures.

However, the tide began to turn this August as the BoE cut rates slightly to 5% in response to the improvement of the nation’s inflation rates. This reduction was coupled with signs that further cuts could be on the horizon, something that has brought about a sense of cautious optimism in the market. There is, for the first time in many months, a slight glimmer of hope that the worst of the economic fallout may be behind us.

HOW HAS THIS AFFECTED THE LOCAL PROPERTY MARKET HERE IN BATH?

Let us first look at the house prices locally between 2020 and 2024.

The average value of a property in Bath in July 2020 was £347,652. Today, that figure has risen to £432,528 – a rise of 24.42%, significant. So despite predictions that there would be a property market crash of sorts, there hasn’t been. So with prices not dropping, surely it is cash buyers that are keeping the property market afloat? Especially considering the hike in interest rates over the last 4 years.

CASH BUYERS: NOT THE GAME CHANGER WE EXPECTED:

In analysing the performance of the different segments of the British property market during this tumultuous period, one of the more surprising findings is the limited role that cash buyers have played in keeping the Bath property market alive. Traditionally, cash buyers have been perceived as having a significant advantage in house buying when there are periods of high interest. This is due to the lack of financing needed which in turn allows them to be protected from the direct effects of higher borrowing costs. So in theory, this should allow them to dominate the market when mortgage rates soar. So, did the number of cash buyers rise when interest rates began to rise in 2022?

THE PROPORTION OF UK HOME BUYERS WITH CASH HAS INDEED RISEN FROM 20%+ IN 2020/21 TO 30%+ IN 2023/24:

So as the above statement says, there has indeed been an increase in cash buyers, but this has not been the expected avalanche. Despite significant financial advantages, cash buyers did not dramatically alter the market dynamics. Instead, the dictators of the pace of the market turned out to be those who were reliant on mortgages. So, even as the cost of borrowing increased, there continued to be many mortgage-backed buyers and the cash buyers didn’t dictate the market as expected. This trend truly underlines the critical role mortgage buyers play in shaping market conditions.

Locally here are the figures:

  • In 2020, 27.57% of UK home buyers were cash buyers, whilst in Bath and North East Somerset, 28.6% of buyers were cash buyers.
  • In 2021, 28.06% of UK home buyers were cash buyers, whilst in Bath and North East Somerset, 31.2% of buyers were cash buyers.
  • In 2022, 27.79% of UK home buyers were cash buyers, whilst in Bath and North East Somerset, 32.1% of buyers were cash buyers.
  • In 2023, 32.94% of UK home buyers were cash buyers, whilst in Bath and North East Somerset, 38.9% of buyers were cash buyers.
  • In 2024 YTD, 31.15% of UK home buyers were cash buyers, whilst in Bath and North East Somerset, 35.0% of buyers were cash buyers.

Locally in Bath and Northeast Somerset, we also saw a growth in cash buyers – yet again, nothing groundbreaking!

MORTGAGE STRESS-TESTING AND MARKET STABILITY:

So, why were those who predicted a significant crash in the market so wrong, despite the increased mortgage rates? Well, mostly it was down to the effectiveness of the mortgage market review stress testing rules introduced in 2014 for borrowers after the global financial crisis of 2008. These rules, designed to ensure that borrowers could withstand higher interest rates, have been instrumental in maintaining stability in the property market. Even as mortgage rates more than quadrupled from their lows, over three quarters of UK’s local authorities saw house prices increase between the spring of 2022 and the spring of 2024.

This stability is further evidenced by the relatively low levels of repossessions compared to the aftermath of the 08/09 financial crisis. In the 4 years following the global market crash of 2008, 113,374 homes were repossessed in the UK. In the Covid years of 2020-2023, that number was 7,379.

Alongside this, strong wage growth (up from £31k a year to £35k) during this period and lender forbearance, have also played a pivotal role in supporting those who borrowed during the challenging period.

These factors collectively prevented the kind of widespread distress that many feared would occur as rates climbed.

AFFORDABILITY AND THE SHIFT IN BUYER PREFERENCES:

While house prices have held sturdy in most places, affordability has continued to be a significant concern for buyers, particularly in more expensive markets such as London. The term ‘race-for-space’ came about from the pandemic where buyers, held up in their smaller more confined homes in the big cities, sought to move further afield and gain more space for their money given many were working remotely and no longer needed to be held up in a commutable location. This rush in migration from urban areas to suburban or even rural areas has been a defining characteristic of the property market over the last few years. As rates have continued to rise, this trend has continued and even gained further momentum.

In the more expensive locations, where the cost of living and property prices were already high, the increase in mortgage rates has made buying a home even more challenging for many. As a result, these sorts of areas have seen a shift in the buyer demographic. Those less affected by higher rates—such as wealthier individuals or those moving from more affordable regions—continue to purchase, while others have been priced out.

SALES VOLUMES VS. PRICES: A COMPLEX RELATIONSHIP:

As we evaluate the performance of the UK housing market – it is evident that whilst prices have remained strong, the volume of sales has decreased in 2023 when compared to the surge that we witnessed in 2021.

Back in 2021, sales transactions peaked at approximately 1.4million, a significant increase when compared to the previous year. However, by the time 2023 rolled around, this figure had decreased to around 1.02million.

Despite the rise in interest rates during 2023, the transaction levels remained in line with long-term trends (1.06 million transactions on average per year between 2008 to 2019), highlighting the current resilience of the housing market. Current projections for the 2024 housing market are suggesting we may reach 1.15 million sales, indicating that the property market continues to be stable and aligns closely with historical norms.

The persistence of strong prices, despite lower volumes of transactions, suggests a degree of pent-up demand. If Bath buyers perceive that interest rates have stabilised or are beginning to decline, we could see a significant increase in transaction activity. This potential recovery is likely to be the most pronounced in regions where affordability remains a key factor, and where the desire for more space continues to drive buyer behaviour.

LOOKING AHEAD – A PIVOTAL MOMENT FOR THE BATH MARKET:

As we move forward, the property market in the UK looks to be held at a crucial juncture. The market is currently showing positive signs as we get to the latter end of 2024. Listings are up by 7.2% YTD compared to pre-pandemic levels and gross sales, 22% higher than the same time in 2023. Net sales have also been surging, a 28% increase compared to the same period from last year. Additionally, the 2.6% rise in sales price/sq.ft since January indicates a steady increase in demand.

Coupled with the recent rate cut and better-than-expected inflation figures, this may signal the beginning of a more stable period for the UK housing market. If the financial markets prediction of another cut by the end of the year to interest rates, then we may see renewed confidence among buyers.

However, it’s essential to recognise that the landscape has changed. The experience of the past four years has reinforced the importance of affordability, the resilience of stress-tested borrowers, and the critical role of mortgage buyers in setting market dynamics. As estate agents, understanding these shifts is crucial in navigating the evolving market and advising clients effectively.

As a Bath homeowner looking to sell, it’s crucial to approach the market with a realistic mindset. With only 53% of properties that come onto the market successfully reaching a completed house sale and move, the odds of selling can feel like a flip of a coin, (12 months to 23rd August 2024, of the 1,420,486 homes that left UK estate agents books, 798,886 homes exchanged and completed, and 710,620 homes withdrew unsold).

To ensure you’re on the right side of that coin, it’s vital to set a competitive price and present your property in the best possible light as this can significantly increase your chances of securing a sale and achieving your moving goals.

In Bath and similar towns and cities, where affordability and the search for space are particularly relevant, the insights gained from this period of upheaval will be invaluable. By staying attuned to these trends and anticipating the needs of our Bath clients, we can offer informed guidance in a time of change.

In conclusion, while the past four years have been challenging for the Bath and UK property market, they have also demonstrated its underlying strength and adaptability. As we potentially enter a more stable period, there is cause for cautious optimism. By understanding the factors that have shaped recent performance, we can better navigate the road ahead and continue to support our clients through whatever challenges and opportunities the future may hold.

If you would like to discuss anything about the Bath property market, please do not hesitate to call us at the office.

5,856 BATH LANDLORDS TO BE HIT BY NEW ECO RULES IN 2030

Posted on by prateek

The rental property market is on the verge of a significant shift, one that will undoubtedly cause concern among landlords across the United Kingdom. The new labour government has made clear its intention to raise the minimum energy performance standards for rental properties, a move that could have far-reaching implications for both landlords and tenants alike.

The proposed change would see the minimum Energy Performance Certificate (EPC) increase from E to C by 2023 and has sparked a mix of uncertainty and anxiety within the rental property sector.

The new regulations are a part of Labour’s wider commitment to combat climate change and enhance the energy efficiency of the UK’s rental homes. This is also a bid to reduce tenant bills given the current energy crisis and cost of living crisis.

The previous conservative government introduced EPC regulations for private rental properties in 2018. This was a part of the broader effort of the previous government to improve the Energy Performance of the UK’s housing stock. Under these regulations, landlords were required to make sure their properties met this minimum standard EPC rating of E, before they were allowed to be placed on the rental market. To support landlords in doing this, exemptions were allowed, and a cost cap was introduced to limit the amount landlords were required to spend on their properties to improve their EPC.

This cap was implemented to reduce the strain on landlords financially, particualry those with older properties. The £3,500 cap covered a range of potential improvements, including insulation, heating system upgrades, and draught-proofing, and was seen as a balanced approach that allowed landlords to comply with the new standards without facing prohibitive costs.

THE SCALE OF THE CHALLENGE FOR BATH LANDLORDS:

The implications of these changes are likely to be profound. Some Bath landlords may decide that the cost of upgrading is simply too high and choose to sell their Bath properties instead. This exodus from the rental sector could exacerbate the current shortage of housing for tenants and hence drive up rents, and make it even more difficult for tenants to find affordable rental homes.

There is also the risk that the increased financial burden on landlords would be passed onto the the tentants in the form of higher rent increases. While the goal of improving the EPC of these homes is to reduce the overall living costs of tenants by lowering their energy bills, this benefit could be offset by the landlords raising their rents to recoup the associated costs.

DOES AGE, TENURE AND TYPE OF HOME MAKE A DIFFERENCE TO THE EPC RATING?:

The EPC scores associated with each band are as follows:

  • Band A – 92 plus (most efficient)
  • Band B – 81 to 91
  • Band C – 69 to 80
  • Band D – 55 to 68
  • Band E – 39 to 54
  • Band F – 21 to 38
  • Band G – 1 to 20 (least efficient)

Looking at only the property type, it certainly affects energy efficiency. Overall, flats and maisonettes are the most ‘energy-efficient’ property type in the UK with a median efficiency score of 73, so a Band C EPC. Detached and terraced properties came in second with a median score of 66 equating to a Band D EPC, and finally in last place was semi-detached houses with a median score of 65, so also a Band D.

Detached homes tend to be more modern and as such, should be expected to have a higher energy rating. There are three external walls exposed in semi-detached houses, which would make you think they would have an overall better average EPC. However, the average age of UK semi-detached homes is older than detached homes and this is where efficiency is lost.

Finally, the terraced home normally only has two external walls, so should be better than semis and detached homes. Yet, terraced homes have solid walls, which make them perform not as well as cavity walls. Finally, flats and maisonettes, are more likely to be more modern and grouped in blocks, making them more efficient.

Breaking down each type into its three tenures of owner-occupiers, private renting and social renting…

Detached properties exhibit relatively similar energy efficiency ratings across all tenures, with owner-occupied homes scoring an average of 64, slightly higher than the private rented sector at 62, with social rented properties at 66. This suggests that while there is a marginal variation, socially rented detached homes tend to be more energy efficient on average.

Semi-detached homes show uniformity in energy efficiency for owner-occupied and private rented properties, both with an average rating of 63. Social rented semi-detached homes, however, are somewhat more efficient, with an average rating of 68. This may reflect better insulation or energy-saving measures in the social housing sector.

Terraced properties reveal a small increase in energy efficiency as we move from owner-occupied (63) to private rented (64) and then to social rented (69). This trend indicates that terraced homes in the social rented sector might benefit from recent energy efficiency upgrades or more rigorous building standards.

Finally, flats and maisonettes demonstrate the highest energy efficiency ratings across all property types, with owner-occupied and socially rented homes both scoring 72, and privately rented properties closely following at 70. The higher ratings in this category could be due to the structural benefits of multi-unit buildings, such as shared walls that reduce heat loss.

In summary, while there are differences in energy efficiency across different property types and tenures, social rented properties generally exhibit higher energy efficiency ratings, particularly in the semi-detached and terraced categories. This may reflect concerted efforts within the social housing sector to improve energy efficiency, possibly driven by policy initiatives and funding targeted at reducing fuel poverty.

AGE:

Finally, let us look at the age of properties and if there is any correlation between age and energy performance rating.

The age of a home is a key determinant of its energy efficiency, largely due to advancements in construction techniques and building regulations over time. Properties built from 2012 onwards tend to have the highest EPC ratings, with a median score of 84 (Band B). Homes constructed between 1983 and 2011 also perform relatively well, with a median score of 72 (Band C).

Moving on to older properties – looking particularly at those built between 1930 and 1982, these have a lower median energy performance rating of 65, equating to an EPC rating of Band D. The least efficient homes are those built pre-1930 which have a median score of 59, ranking them with an average EPC of Band D also.

THE LOCAL BATH PICTURE:

38.36% of the UK privately rented homes are in the proposed minimum EPC standards of A to C. Locally in the South-West, there was an average of 40.63% of homes falling between those marks.

Nationally, 59.46% of private rented homes are in the D and E bands of the EPC rating system and locally again in the south-west, there are 56.46% of private rented homes in this category.

In other words, over 50% of privately rented properties in Bath are within the EPC bands D to E which would mean under these proposed changes they would need to be improved. To visualise this better, there is a heat map below of the homes that would fail the testing under the proposed new law.

BATH LANDLORDS NAVIGATING THE UPCOMING UNCERTAINTY:

In the face of this wave of new challenges, landlords in Bath must adopt a pragmatic approach. While the initial reaction may be one of concern, it is important to consider the long-term benefits of making these energy improvements to your investment properties. Properties with higher EPC ratings are more attractive to tenants, alongside this they also tend to yield higher market value. By investing in upgrades to your investment property, you can not only comply with the new regulations afoot but also enhance the value of your property on the market.

Moreover, there may be an opportunity to mitigate the costs. The government has yet to finalise the details of the new regulations and there is hope that they will introduce measures to support landlords through this transition to more energy-efficient homes. There may be grants, loans or tax incentives available to those who make the improvements and thus offset some of the cost.

Bath landlords should also consider the timing of their investments. While 2030 may seem distant, the scale of work required means starting early could be beneficial. Properties that are upgraded sooner rather than later will be in a better position to attract and retain tenants, particularly as energy efficiency becomes an increasingly important consideration for renters. Furthermore, by acting now, landlords can avoid the rush and potential price increases that are likely to occur as the deadline approaches.

It is also worth considering the broader societal benefits of these changes. Improving the energy efficiency of rental properties is not just about meeting government regulations; it is about contributing to the fight against climate change and helping to reduce the country’s overall carbon footprint. This is something that both Bath landlords and tenants can take pride in, and it aligns with the growing demand for more sustainable living options.

Again, the improvements made to properties will not only benefit current Bath tenants but also increase the long-term viability of the rental market. As properties become more energy-efficient, they will be better equipped to withstand future changes in energy prices and regulations. This future-proofs investments and ensures that landlords can continue to offer quality housing in a competitive market.

FINAL THOUGHTS: A STRATEGIC APPROACH FOR BATH LANDLORDS:

In conclusion, while the proposed changes to EPC requirements may initially seem daunting, they should be viewed as an opportunity rather than a threat. By taking a proactive and strategic approach, Bath landlords can not only meet the new standards but also enhance the value and appeal of their properties. This will not only benefit their portfolios but also contribute to a more sustainable and resilient local rental market.

The key is to start planning now, seek out advice from Letting and Estate Agents such as ourselves or many of the other agents located in Bath, and consider the long-term benefits of these changes. The road ahead may be challenging, but with careful planning and a commitment to improving the quality of rental housing, Bath landlords can navigate this transition successfully.

As leaders in the local property market, feel free to contact us to discuss what has been said in the article as it is everyone’s responsibility to not only meet these new standards but to embrace the positive changes they bring.

FIRST-TIME BUYER HOMES ARE 34% CHEAPER TODAY THAN 35 YEARS AGO –

Posted on by prateek

It may surprise many, but despite the significant rises in inflation over the last few years, buying a house in today’s market is more affordable as a percentage of take-home pay.

First, the average value of a typical first-time buyer’s home has surged by 318% since 1989 (35 years ago for those counting), reaching £314,000 in 2024. So, you would think the title of the blog sounds…well…wrong.

However, the headline price one pays for a home is not relevant when looking at affordability, to measure this we need to look at what the home costs each month out of someone’s salary.

Despite this significant increase in headline pricing of houses over the last 35 years, the monthly mortgage payments that a first-time buyer needs to make today are significantly lower as a proportion of their monthly take-home than in 1989.

According to data from the Nationwide Building Society, today’s first-time buyers in Bath spend 41.9% of their household take-home pay on mortgage payments. This is substantially lower than the 64% required in 1989. This was due to the Bank of England’s base rate being 14%, and base wage rates being lower than they are today comparatively. So we can see a representative 34% reduction in the financial burden that a mortgage payment has today on first-time buyers compared to 1989.

Now, 1989 was 35 years ago and many may argue that as such, it is an irrelevant comparison to today’s economy. However, if we compare the data from today to a closer time, 2007, we can see that even 17 years ago, first-time buyers had to allocate 51% of their household income to their monthly mortgage payments. 17.9% higher than today’s figures which continues to show the relative affordability of a home in Bath over the last few decades.

Now we have established that when comparing % of monthly income to mortgage payments, how has this reduction happened? Well, in real terms (after inflation) incomes have risen and interest rates are much lower. UK household incomes have grown in real terms by 25% in the last 35 years, while interest rates are at 5.25%.

Beyond this, Bath’s first-time buyer affordability is influenced by several factors beyond interest rates and income. One significant aspect is the overall change in the housing market dynamics, including government policies, the availability of mortgages and demographic shifts.

UK GOVERNMENT POLICIES AND MORTGAGE AVAILABILITY:

Government policies supporting first-time buyers, such as Help-to-Buy schemes and favourable mortgage products, have made homeownership more accessible. These policies often provide financial assistance or guarantee parts of the mortgage, reducing the initial financial barriers for first-time buyers. Moreover, the regular availability of competitive mortgage products with lower interest rates and longer repayment terms (35+ years) has eased the burden on first-time buyers.

DEMOGRAPHIC SHIFTS AND URBAN DEVELOPMENT IN BATH:

Demographic changes, including the growth in urban areas and improved infrastructure, have also contributed to the housing market’s evolution. With a strategic location and vastly improved transport links, Bath has become an attractive option for commuters and young families. This has increased demand for housing, driving development projects that cater to the needs of first-time buyers with affordable housing options.

RENT VS BUY IN BATH – ECONOMIC CONSIDERATION:

As rental prices continue to rise at a considerable rate, the economic advantage of buying over renting is becoming more pronounced. Renting often involves annual rent increases, which then in turn offers no financial long-term security. In contrast, buying a home with a fixed-rate mortgage does offer financial predictability in monthly payments and property value appreciation.

However, many people will counter these arguments by saying that first-time buyers need to find large deposits. The average first-time buyer deposit in 2023 was an eye-watering £53,000. However, do remember that this is an average. 95% mortgages with 5% deposits have been available for some time now, but these do come with considerably higher interest rates and require a strong credit rating. For example, a large deposit (25%) will get to a lower interest rate (at the time of writing, the best 95% mortgage/5% deposit was at 5.2%, versus a 75% mortgage/25% deposit mortgage at 4.24%), yet if one extends the number of years one has for the mortgage, then the monthly payments will come down. (Remember to take advice from someone qualified to advise you on this).

Another advantage is that homeowners build equity. This becomes a significant financial asset over time, whereas renters do not gain any form of ownership benefit despite monthly payments.

If we are talking about the long term rental option in life then do be aware that if you retire having not purchased a home then you can qualify for support from the government for rental payments. However, if you are the sole occupant then you may only qualify for a smaller rental property payment and thus have to move upon retirement.

FINAL THOUGHTS:

The Bath property market has seen a roller coaster shift in affordability for first-time buyers over the past 35 years. While property prices have increased substantially, the proportion of household income required for mortgage payments has decreased due to lower interest rates, real-term income growth, and supportive government policies. This improved affordability, combined with the rising cost of rent, makes buying a more attractive and financially sound option for many.

The economic landscape has changed significantly, favouring first-time buyers in ways that were impossible in 1989 or even 2007. As the market continues to evolve, first-time buyers in Bath can take advantage of the current conditions to secure their financial future through homeownership. The reduced financial burden and the potential for long-term gains make now a suitable time for those considering stepping onto the property ladder.

The property Market in Bath 2024 – A strategic guide:

Posted on by prateek

Are you a homeowner in Bath? Are you thinking of moving home in the next 6 to 12 months? Whether you’re aiming to buy your dream home or sell a beloved property, understanding the property market here in the local area is crucial.

You might also be a Bath landlord, possibly looking to sell up your portfolio or add another property to your portfolio.

Also, you could be a first-time buyer wondering if now a good time is to get onto the property ladder.

Regardless of your situation, understanding if the Bath property market favours buyers or sellers is crucial to making informed decisions.

By examining the local market, we can gauge the current market trends, prices, and opportunities, allowing all parties – buyers, sellers, and first-time buyers – to strategically plan their moves.

WHAT SORT OF BATH PROPERTY MARKET ARE WE IN?

Those familiar with our articles will know that the measurement of whether it is a buyers’ or sellers’ market is gauged on the proportion of properties marked as ‘Sold STC’ and ‘Under Offer’ compared to the total number of properties that are currently on the market.

For example, if there are 46 properties sold STC and 100 available/for sale then we are looking at a percentage of 46% which would indicate a sellers’ market. See below for the way we gauge this figure is as follows:

  • Extreme Buyers’ Market (0%-20%)
  • Buyers’ Market (21%-29%)
  • Balanced Market (30%-40%)
  • Sellers’ Market (41%-49%)
  • Hot Sellers’ Market (50%-59%)
  • Extreme Sellers’ Market (60%+)

The significance of these brackets can’t be overstated. They directly impact everything from listing prices to negotiation leverage.

CURRENT BATH PROPERTY MARKET STATUS:

When we look at the most recent findings, we can see a slight shift in the market. Within the postcode districts of BA1/2, there was an extreme sellers’ market in 2022 at 70%. Then throughout 2023, the Bath property market was in the low/mid 50% range indicating a hot sellers’ market. Then looking back to the start of 2024, the decrease has continued in the way of a buyers’ market and we are now at 51%.

WHAT DOES THIS MEAN FOR BATH’S PROPERTY MARKET?:

FOR BATH SELLERS: We are now in a property market where sellers need to start being more strategic, flexible and patient. You need to brace yourself for a longer time on the property market and make sure you are getting your house valued realistically. Setting the price right is crucial for attracting suitable and proceedable buyers.

So why is this? Well, when we look at the figures, the chances of selling your home in Bath quickly, have dropped over the last few years.

Of all the Bath homes that left estate agencies’ books between July 2022 and June 2023, 65% of these homes sold and completed so the remaining 35% left the market unsold and withdrew. Since January 1st 2024, that figure has dropped again to 58% of properties selling.

So, what can be done to boost your chances of selling your home in today’s market? Well, empowering the use of modern technology is the first port of call. Make sure your agent is listing your home across multiple channels and we are not just talking about the traditional property portals such as Rightmove, we mean social media channels too. Creating virtual tours of your property for the listing is also a great way to better present your home, so make sure your agent is providing this service, especially for higher-end properties. Interactive property listings such as 3D space tours where the user can look all around the property from the comfort of their home is becoming very popular.

FOR BATH BUYERS: Expect intense competition. If you are after highly sought-after properties, such as three-bedroom houses, then securing pre-approved mortgages and positioning yourself in the most proceedable way possible is going to be hugely beneficial and put you ahead of other prospective buyers.

Remember, four out of five sellers are also buyers, so what you may lose on the sale might be compensated for on the purchase. External influences such as global economic trends, inflation, and interest rate repercussions could all cast shadows on the Bath property market.

FINAL THOUGHTS:

As we progress into the eighth month of 2024, the Bath property market presents challenges and opportunities for buyers and sellers.

Understanding these market subtleties is crucial for anyone considering a move, from existing homeowners to seasoned buy-to-let investors, first-time buyers, or those looking to relocate to Bath.

Stay flexible, stay informed, and remember that your home-moving experience is as much about the journey as the destination.

What are your thoughts on Bath’s developing property market since we have a new Government?

Do you anticipate any other shifts or trends in the Bath property market?

What are your local insights and experiences?

Please do share them.