Affordability and the lack of supply of properties in the housing market are being blamed for the housing market sitting idle. The expected spring bounce failed to materialize as summer came and home buyers remained disinterested either due to the inability to buy or because they were waiting out for better borrowing opportunities and more affordable homes coming to the market. Sellers are still putting homes on the market at higher prices because they can get it. No one is faulting the sellers, but buyers are having to be creative in their dream home shopping.

The do it yourself (DYI) trend is being taken on by home buyers as an option to help them bypass higher cost homes. Their dream home may not be or even look like what they wanted, but they purchase a lower cost home understanding it is a path to homeownership. They will do what work they can to make it their own beloved home and turn to experts when they need to or can afford to do so. 

It allows them to bypass the higher rental costs, become a homeowner, and do so at a cost they can afford. 

Other home buyers are teaming up with friends or family to buy a house they can co-operatively purchase, upgrade and improve, and save money from rental costs. They might stay in the situation or change the home to allow it to be a multi-family home or sell it, take the profits and repeat the process until house prices drop or interest rates do or both decline to a more affordable level.

Some families are deciding to make their new home multi-generational. It provides an opportunity for seniors to be near family, to feel safer, to continue to be independent in their lives while allowing their children or other family members to enter homeownership more affordably. 

Home buyers are also using the assistance of friends and family to help them afford deposits on their first purchase. 

In addition, home buyers are choosing to purchase a more affordable house far from the city location of their job. They would rather be a homeowner traveling long distances to and from their job than to continue paying higher rental fees in return for convenience.

House prices are not expected to decline. The market may be subdued and lack the rapid growth of the past few years spurred on due to the cheap cost of borrowing, but demand is not expected to decline and leave sellers anxious enough to find a buyer to drastically drop their asking prices.

The demand in the market could in fact increase and do so when the Bank of England’s Monetary Policy Committee (MPC) decides to cut the standard base interest rate. That decision could occur as soon as 1 August when the committee meets for the first time since June. There is strong expectation of a 0.25% rate cut in response to inflation being put under control and at a target rate of 2.0%. 

Inflation reached 2.0% in May and was reported in June. The next inflation report is due on 17 July. The information released will either heavily confirm a rate cut in the next MPC meeting or a possible delay till September. 

Home buyers could be waiting out for lower mortgage rate deals, but lenders are already anticipating the cut and optimistically cutting their mortgage offerings as if the MPC has voted for the decline to the base rate. It is considered inevitable it will happen sooner rather than later and to get a jump on the attention from borrowers, lenders are generously cutting rates.

Waiting for a cheaper rate to appear that mimics years ago when they were historically low due to the pandemic will have home buyers as well as homeowners needing a remortgage waiting and waiting. The base rate will not be reduced to almost zero because inflation is at target. The historically low interest rates of yesteryear are gone.

Some lenders have likely reached their lowest interest rate offer in response to the first base rate cut since March 2020. For those staying away from purchasing or obtaining a remortgage, revisiting the lending market could offer motivation to take advantage of attractive current deals.

Those that need house prices to fall, could also be waiting for something that will not happen, at least with all things remaining as they are now. It doesn’t mean homeownership is out of reach, it just may take a different path or look different than it would have in 2020, 2021, or even 2022. 

Being creative and willing to adapt to a new housing market situation and borrowing situation will bring about ways to afford a home, as well as ways to remortgage and keep homeownership affordable for years to come.