Yesterday the Bank of England announced it would be hiking interest rates to 3 per cent and made the dismal prediction the UK is about to fall into its most prolonged recession since records began. Despite the changes being widely expected, the biggest interest rate increase in 30 years will come as an unwelcome shock to Bristol homeowners used to record low mortgage rates who are, perhaps for the first time, experiencing a squeeze on their incomes from all sides.
The rate rise has been a long time coming for Dominic Wyatt, a Sales negotiator for Bristol Property Centre, who said the country's economic trajectory has been clear for some time now and expects things will get worse before they get better. He told us in recent weeks he’s already noticed buyer interest has slowed in the smaller properties, which are typically snapped up quickly by those looking to get on the property ladder.
This contrasts sharply with earlier in the year when it became increasingly common for properties, particularly two-bed flats favoured by first-time buyers, to receive multiple competing bids above the asking price. “Properties are being sold, don’t get me wrong. However, it’s not as hot; there are fewer offers over happening,” he said.
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"There are still opportunities, but for first-time buyers, it will certainly spook them from the market, and I do think that something should be done for people in that position. Nobody is going to want to buy a property at the moment - to go in at 5 or 6 per cent when you're probably looking at your bills increasing by more than that; it's just not very appealing."
He thinks that government intervention will be necessary to help first-time buyers and suggests that while you can't always time your purchase perfectly to the market, waiting will be the best option for many people. But it's not all doom and gloom. ”If somebody’s buying with a large deposit, it may not be the worst time to buy, especially if you’re planning to stay in a property for the next decade at least.”
We heard optimism elsewhere too. James Brown, sales manager at CJ Hole in Clifton, recognises the market is still incredibly robust in Bristol's most popular areas as demand continues to outstrip supply. While he certainly doesn't expect to see an increase in prices, he thinks it's too soon to tell if this plateau will turn into a downward trend but suspects Bristol will fare better than other areas in the country.
At CJ Hole, they've also noticed a tailing off in the out-bidding frenzy which began during the lockdown London exodus. Brown said, "We've certainly seen a decrease in the amount of best-and-final and over-asking-price offers we get. They're still happening, but far less frequently."
An upside to this is that for those who are fortunate enough to be in a position to buy or sell, the process is likely to be more comfortable and less chaotic. Taking a positive but realistic outlook, Brown suspects those who can continue to buy will not be under as much pressure, and he hopes this will result in less disappointment, more time to make decisions and potentially more choice. Regarding the number of properties on the market, agents reported to us that the number of listings hadn't yet dropped but suggested it was too soon to tell and that a fuller picture would be available in the new year.
And what about those considering a buy-to-let mortgage? Brown said, "One thing that has stayed incredibly strong and seems to continue is Bristol's rental prices for professional and student lets, making it still very attractive for investors. The rents remain strong for the same reason we think the market will still remain popular, and that is because there are still so many people moving to Bristol."
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