Why it's only natural to be obsessed with house prices: Sarah Coles

You’d be forgiven for not spotting it, because it hasn’t been obvious from the figures – with Nationwide and Halifax both posting annual price drops. The key is to look at the average price of a property. The ONS showed that it peaked just after the mini-Budget in September last year, at £291,909, then it gradually dropped to a low point in March this year, of £282,115. Since then, it has been rising. The average price in the most recent figures (August) was shy of the previous peak – at £291,044 – but newer figures from Nationwide and Halifax have shown some monthly rises since.

The fact we’ve been comparing current prices to the previous peak a year ago has made it easy to miss the gains that have been made since March. There are, of course, no guarantees that this pattern will continue, and there’s every chance that prices will fluctuate for a while.

But while price rises are great for sellers on paper, there is one major problem. To get your hands on this money, you have to flog your home first, and that’s far easier said than done.

The resilience in house prices isn’t due to an influx of buyers competing over properties, it’s because so many sellers have decided to stay away for now too. Buyers are still few and far between. Some have been priced out of the property they want by rising mortgage rates. Others can afford to buy, but aren’t keen to snap up a new home while mortgage rates are sky-high and house prices look vulnerable. It’s why this September saw fewer property sales than any September in a decade.

According to Rightmove, it takes around 60 days to agree a sale at the moment – roughly double the time it took during the pandemic boom. Meanwhile, Zoopla says that sellers are having to cut asking prices by more than 4%.

And there’s no real sign of a significant shift in the immediate future. The miserable level of mortgages approved for September is a decent indication the rest of the year will be fairly deathly. It may take more meaningful cuts in mortgage rates before enthusiasm returns to the market, which might not happen until the middle of next year or beyond. We might not get a robust market until 2025.

Some buyers and sellers will be keen to move anyway, because you can’t always hang on to time the market perfectly. In this kind of a market, you need to work harder to sell a property.

The key is to price it realistically – brutally so. It’s easy to overprice, because the market is set up for it. With so few sellers around, estate agents are keen to win business, so some will inflate their expectations to persuade you to choose them. Unfortunately, if you price it too high, you’ll squander the initial interest in the property. You’ll then be forced to cut, and risk buyers thinking there’s something fundamentally wrong with your property.

Getting the price right isn’t easy. The usual trick is to get quotes from three estate agents, and go with the middle one. However, it also pays to check selling prices of properties like yours in the area – which should cut through the fog of asking prices. Then you need to be honest with yourself about the kind of price that’s likely to generate a sale.

There are other things that will help secure a sale, like ensuring your estate agent is good at their job, and is putting the legwork in to make sure your home is marketed as well as it can be. You can also make sure your property is ready for a sale. This will always be a balance between how much work you have the time and money for, and how nice you want your property to look. However, if you can sort any glaring issues, it will count in your favour. Decluttering is always a winner, as is cleaning the property, and tidying up the garden. However, fundamentally, it doesn’t matter how pretty you make the place, it’s only going to sell if the price is right.

For buyers wondering what to do, you need to be certain about what you can afford, and realistic about the kind of property that will suit you for long enough that you don’t need to start house-hunting again in a hurry. Once you know where you stand, this could be the time for a cheeky offer, particularly for properties that have been hanging around on the market. For some buyers, your research will make it clear that now isn’t the time to buy, and that you may need to hang on for mortgage rates to drop.

If you choose to wait, you need to be aware that you’re taking a risk. Buyers will be hoping there’s a golden opportunity when rates drop and before house prices start to rise in earnest. However, there are no guarantees this will materialise. You need to be prepared for the fact that prices may rise sooner than anyone had expected, so by the time mortgage rates have fallen, higher prices have cancelled out a big chunk of your monthly saving.

This uncertainty means you can expect the property debate to continue to rage over the coming months – but then again, doesn’t it always?

Nasty surprises

There have been nasty surprises lurking around every corner in the past year. Our research shows that 54% of people have been hit with an unexpected cost out of the blue in the past 12 months. On average, they’re setting us back £788 each, but one in eight people forked out more than £2,000.

The number of unexpected expenses has been growing, as we try to cut our costs by skipping routine maintenance and repair on everything from our car to our home or even our pets. It means small niggles don’t get solved until they’ve turned into bigger problems.

Meanwhile, our ability to absorb these one-off costs has been hampered by the cost-of-living crisis. The research also showed one in four people have eaten into their savings because of rising prices, and one in 20 have emptied their accounts.

It’s one reason why almost half (46%) borrowed to cover the cost of emergencies – including 15% using a credit card, 7% borrowing from family and friends, 7% using an overdraft, 4% using a loan, 3% using buy-now-pay-later and 3% a store card. While borrowing may be a short-term solution, in the end it adds to the problem, because extra interest doesn’t just eat into your income, it adds to the overall cost, so nasty surprises get even nastier.

SARAH COLESHead of Personal Finance and Podcast Host for Switch Your Money OnHeadline Money Expert of the YearHargreaves Lansdown