Phil Spencer on what would be ‘biggest driver’ of housing market crash

Phil Spencer asks what it would take to crash the property market

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According to the data, average UK property value rose by 0.9 percent in August, despite a drop in annual growth recorded in July. Annually, this equates to a price change of 13.6 percent. Experts claim the market remains buoyant despite economic uncertainty. Earlier this month, Rightmove, the UK’s largest property site, also reported an increase in the average price of homes coming to market.

It found that the average asking price had increased by £3,398 (0.9 percent) in the month to October 8, to a new record of £371,158.

However, some experts are concerned that the ongoing cost of living crisis, surging energy bills, rising interest rates and higher mortgage borrowing costs could exert “downward pressure on house prices in the months ahead”.

But could there be a UK property market crash in the months ahead?

Founder of Move iQ and TV property expert Phil Spencer discussed what it would take for the property market to crash with Nathan Emerson, the CEO of Propertymark.

Propertymark is a membership organisation for estate agents and is the UK’s leading professional body for estate agents.

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Propertymark has 18,000 members. Its members are committed to codes of practice, professional standards and self-regulation.

Nathan has first-hand information from property markets right across the country in all price brackets.

During the podcast, Phil asked Nathan what it would take to “crash” the property market.

Nathan said “the biggest driver” is confidence. He said: “It all boils down to confidence. If people are driven in a non-confident manner and people, it becomes a self-fulfilling prophecy really.

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“Actually, what would do it would be a combination of adverse media not necessarily a balanced media. It would be a pointed media, it would be consumer confidence, it would be mass unemployment and it will be skyrocketing interest rates over a long sustained period of time.

“I think while some of the Government decisions have been questioned by people there are other factors in there that it is working towards.”

One of biggest changes during the mini-budget that has not been subject to a u-turn was the cut to stamp duty.

Former Chancellor Kwasi Kwarteng last month raised the threshold of which none is paid from £125,000 to £250,000, while for first-time buyers that threshold went from £300,000 to £425,000.

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Nathan said this is a good way for buyers to save money that they could then put into their mortgage.

He explained: “So if you look at the stamp duty [changes] that they announced.

“I was talking to somebody the other day. They’ve got a £7,000 saving on stamp duty and the question I said to them is, ‘so did you have the money for the deposit for the property and the stamp duty?’ and they said, ‘yeah we saved that money’.

“I asked them, ‘what are you going to do with that £7,000 that you’ve saved?’ It went from everything from extra furniture to doing nothing with it.

“I then said to them, ‘well, okay if you took that £7,000 and you put that as over-repayments into your mortgage it might be worth going back to your mortgage advisor and asking over the length of term if you put that extra £7,000 in how much would you save in interest over the term?’

“It’d be a lot. And you know when you start doing those kinds of calculations even small overpayments of mortgages for people that can afford to do it are the things that insulate you many years down the line and you look back and you’ve saved tens of thousands of pounds.

“So there are things in the budget there, and it’s how people utilise that.

“Do they spend it on a flash holiday? Or do they redecorate? Or actually do they work to make that money work for them?”

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