The housing market is ‘resilient’ after home improvement inquiries soar amidst falling prices, say experts

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Tony Passmore, CEO and Chairman at The Passmore Group, says homeowners are choosing to make home improvements instead of selling due to market struggles.

Data shows that the industry went through a significant boom during the COVID-19 period as families pivoted budgets to house renovations and while that has ended, experts expect that with many homeowners deciding to stay put, money will be, again, put into house improvements with the view of making a sale at an increased price in a more stable market.

Tony Passmore, CEO and Chairman of The Passmore Group,  a full home design specialist provider, said: “The last 12 months have been quite challenging, especially as the news is full of stories about house prices falling, inflation rising, and interest rates going up. That said, in the past month, we’ve seen an increase in inquiries for home improvements, bathrooms, and kitchens. I suggest that one of the reasons, and I’ve seen this before, is down to the fact that with the housing market under so many pressures, homeowners are making the decision to stay and improve their homes, rather than chance making a loss on their property or taking on extra cost.

“I’ve seen a number of recessions, economic slowdowns, and periods of low activity in my career. And what normally happens is if the market’s buoyant, people move and improve. If the market quietens down and people think their house is worth a bit more than what it is, people often decide to stay put and ride it out.

 

 

“And at that point, they think, ‘if we’re going to stick around for maybe five years, we’ll renovate the kitchen and bathroom, add value to the house, and give it more kerb appeal when the market picks back up again.”

Jonathan Rolance, a Property Expert, says the market is ‘resilient’ despite the decrease in prices 

Forecasts predict that the value of homes will drop by 5% between now and the end of the year, with further predictions expecting the same decline in 2024, with rising interest rates dragging down the growth that had been seen prior to this year.

Despite the grim news around house prices, Jonathan Rolande, a Property Expert and Professional Property Buyer, believes the market is proving to be more resilient than expected. He said: “There are still transactions happening. Banks are still lending, people are still borrowing cash, and buyers are still purchasing. I was working in 2008 when we had the credit crunch and banks collapsed. There was no lending, no buying, and no transactions. Everything dried up overnight. So it’s not as bad as it could be right now. 

 

“Lloyds Bank’s prediction for the remainder of this year is in line with what I would think as well, which is roughly a further 5% decline in prices. We won’t know the true impact until we see the sale prices. We’ve got to really wait until January, February, even March of 2024 to see what was happening in October, November, December of this year with regards to sales being agreed and what they completed at.”

With house prices falling at their fastest rate in 12 years, experts are predicting that many homeowners who were previously looking to sell their property will now stay put and see how the market transpires, rather than lower their prices just to get it off the market.

Jonathan Rolande added: “As things decrease elsewhere, homeowners will stay put. They won’t be looking to move and take on bigger mortgages and bigger debts and stamp duty and everything that comes with purchasing and moving. 

 

“And they won’t be looking to increase the size of their property as much, knowing that it could be falling in value over the next one to four years, potentially. So, instead, there will be people looking to renovate. They’ll be improving kitchens, they’ll be changing bathrooms, extending for new additions to the family and that kind of thing, rather than moving. 

“The only thing that will make it more difficult, I think, for people, will be the fact that they won’t be able to borrow money as easily from the banks, or if they do, it will be more expensive.” 

Best tips to homeowners to navigate the house market decline

Tony Passmore said: “Long-term, if you’re not going to sell your house right now but have plans to in the future, then I’d be saying put some value on your house by modernising and updating the key rooms such as the bathroom and kitchen. This gives the home ‘kerb appeal’. When the time comes to sell and move, some value has been put on the home because somebody buying it won’t have to rip it all out and do it all again. And so, it’s money not wasted.”

 

Jonathan Rolande said: “We have to really prepare for the long haul. Mortgage rates, I suspect, almost certainly won’t be coming down in the near future. They may go up a quarter, possibly a half over the next month or two, and then they’ll gradually start to come down, but not for 18 months to two years. Homeowners need to maximise income and minimise expenditure while we navigate this.

“By saving now, you’re covering yourself for either eventuality, in the worst case scenario, mortgages go up and you’ve got a bit of money to cover the increases. The best-case scenario is rates come down and 

Tabitha Cumming, property expert at The Lease Extension Company, said: “Although the various industries that would be involved in home renovations are also going to feel the effects of declining house prices, many homeowners are opting to renovate their homes instead of moving. 

 

‘Renovation prices will likely remain higher for the time being, so there are some things homeowners can do:

  • Budget accordingly – a lot of people are finding that higher building costs are making projects a lot more costly than they originally anticipated. Sticking to the budget that you set is key, and this can be helped by making a list of things that are ‘must-haves’ and ‘dream features’ in the renovation.
  • Try to focus on smaller projects – some homeowners opt to remortgage their homes to fund large-scale renovations, but this is not a good idea when high mortgage rates are predicted to be an issue in the near future. If you are staying in your current home for the foreseeable future, try to delay any larger renovations until the market levels out. Instead, focus on smaller projects that repurpose and use existing space in your property, or renovations that you can pay for with cash or a small loan.

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