The housing market has shown resilience in the face of rising interest rates. The same happened during the lockdowns of the pandemic when sales boomed as buyers sought more space to live. The demand for more space indoors and outdoors of a property during the pandemic was called The Race for Space. Country living took over as many left behind the city lifestyle to have larger homes and gardens. Now, the market is finding a new demand as flats become popular again.

According to Rightmove, agreed sales were only 1% below the sales that occurred in March 2019. Much of this is due to the renewed attention toward owning a flat as a starter home or the best size for older couples or singles. Agreed property sales for flats are 10% above 2019 after being 11% below at the start of the year. This is likely due to rising interest rates and attention moving to more affordable purchases of flats versus larger properties more popular in the height of the pandemic.

The sales boom of last year still reigns in the record books, as the current property sales are still 18% less than the same time last year.

The rise in purchased flats is also occurring in the London area. This is the same area that saw a high number of the population escaping the city during the pandemic and lockdowns. It could be simply a return to normal after the pandemic, or a sign that due to affordability flats are more attractive than higher cost properties, though London normally has higher priced properties than most areas. It is in the capital city that the agreed sales of flats are now 23% higher than in March 2019.

In total agreed sales for Britain, sales are 18% below the sales levels seen this time last year, but are up 11% after January’s data recorded a slump of 21% from January 2019.

While the Bank of England’s Monetary Policy Committee (MPC) has increased the standard base interest rate during each of the last eleven consecutive meetings since December 2021, lenders have been edging down their interest rate offers. The peak of offered rates was last October with five-year fixed rate mortgages at almost 6%, and the same now near 4.5%. 

The March MPC meeting pushed the base rate to 4.25%.

The housing market is also benefiting from sellers expecting a cooling off of demand from buyers at any time. This has resulted in a more aggressive stance to sell and has pushed asking prices downward. However, many experts feel the average house price is still in need of major correction after the pandemic price push due to strong demand.

Tim Bannister, Rightmove’s Director of Property Science Innovation, remarked, “The market is remaining surprisingly robust given the economic headwinds that have affected movers in the last six months. While the market is by no means at the exceptional level it has been in the last couple of years, it is a positive sign for agents that sales at a national level are being agreed at the same rate as the last more normal market of 2019, though there are regional differences across Britain.

“The level and size of reductions has also returned to its pre-pandemic norm, though pricing right the first time can often lead to a quicker sale, so it's important for sellers to speak to an agent about their local market so that they price realistically and give themselves the best chance of finding a buyer.”

A resilient housing market is important to the economy, but also to homeowners in need of finding a remortgage. At the end of their mortgage term, a homeowner will choose to remortgage or will be moved to their lender’s standard variable rate (SVR). Many homeowners that purchased during the pandemic and obtained historically low interest rate offers from lenders are coming to the end of their fixed deal. This will leave them with paying interest rate offers double or more of what they were used to paying. Finding a remortgage is important to keep from being put on a riskier and usually higher interest rate SVR.

In shopping for a remortgage, it is important for homeowners that their property value remains higher than their debt value. The loan to value, or LTV, is an indicator of what remortgage offers the homeowner will be offered from a lender. 

When the housing market begins to decline, so can property values and it could put homeowners out of reach of the best remortgages at the least and for those that fall into negative equity the worst case scenario is a remortgage is out of reach until they bring their LTV into a better ratio for borrowing.

For now, it appears the usual spring season boost to the market could occur and that would help the housing market, the economy, homeowners, and of course the home buyers that made it onto the property ladder. This is optimistic news for the UK housing market that has had much gloom and doom predicted for it in 2023.