The media is full of doom and gloom again. The cost of living crisis is affecting everything from the price of bread to the cost of petrol. Household bills are rising, and many journalists are comparing the more recent months to financial down points such as the banking crisis, the crash of the late 1980s, and the sustained downturn of the 1970s. However, doom and gloom sells newspapers so you could be beginning to wonder if things are really as bad as they seem and how long it will be before the economy starts to look better.
One of the best ways to look at what is going on in the local economy is to consider house prices in the area. Many people feel richer or poorer depending on the value of their home and this affects how much they believe they can afford to spend elsewhere, so what is happening to house prices in Bath?
The Recent Past
The last two years have seen a dramatic rise in the cost of properties on the market, especially around Bath and other areas that are outside major cities but are considered highly desirable. The change in working culture following the pandemic means that more people can work from home rather than enduring the daily commute to the office. This means that people have more choices as to where they live and many of them have moved out of the major city centres, towards smaller cities where they could enjoy a better quality of life while still enjoying the amenities they are used to. This has caused a rise in house prices in the Bath area.
Inflation
As inflation has risen, prices have become more expensive, and this has caused a slowdown in house prices over the last few months. People are less sure of their finances and their jobs and don’t want to take on bigger financial burdens. This has meant that fewer people want to buy new houses, especially larger, or more expensive ones. The houses that are available to buy have been on the market for longer than they would have been in a buoyant market.
Some people are still incredibly motivated to move as life still goes on, even in a downturn. People have children, get divorced, or even die which forces a house sale. To get a property sold, many people become more competitive. They will reduce the price of the property they have on the market so that they can attract buyers and get on with the next part of their lives. In Bath, this has meant that there has been a reduction in house prices but it does not seem to be as dramatic as the doom-mongers have predicted. As Bath is still a desirable area, the downturn in the area will likely be softer than elsewhere.
Interest Rates
Interest rates have been increasing for the last six months and it is predicted that they will continue to rise in 2023. This means that it is more expensive to buy a new property and this is putting a lot of people off making the next move.
Interest rate rises mostly affect people who want to buy their first home or move up the property ladder, as it makes these things more expensive. However, Bath has a smaller proportion of first-time buyers than elsewhere, as property in the area was already quite expensive. This means that there are proportionately more buyers in the area than elsewhere in the country and this keeps house prices more buoyant than elsewhere.
Estate Agents
Bath’s best estate agent brands are renowned for helping people to move around the area regardless of the economic outlook. Their enthusiasm has a knock-on effect on the housing market as it keeps the outlook positive in the area and it means that more people are keen to move. This means that there could be more buyers in this area than elsewhere in the country, making the downturn less pronounced in Bath.
Outlook
There is no doubt that house prices will fall over the coming months, and this will affect Bath too. However, the downturn in this area may be less keenly felt than elsewhere as people will keep moving and wanting to live in Bath.
Despite the predictions of some of the doom-mongers, Bath is well situated to weather the storm of a slight reduction in house prices over the coming months. It is best to remember that everything comes to an end, even economic downturns. Before long house prices will start to rise again and this will be widely reported too.
Leave a Reply