Soaring energy prices affecting the residential property market more than interest rates
Soaring energy prices are having as much of an impact on the property market as the rising interest rates, believes Cathy Thomas, Solicitor and Director of Sheffield-based property law firm Mason Thomas Law.
It is anticipated that the housing market is likely to slow down in the face of rising interest rates. But with housing demand still outweighing supply, Cathy believes that the reason behind this is not necessarily wholly down to rising interest rates, but a combination of this together with the rising cost of energy bills. Most households have seen their energy bill at least triple in recent months, which means that any thoughts of moving to a more expensive house with an increased mortgage, and the increased energy bills associated with a larger home, are having to be put on hold.
Cathy says “As higher energy bills appear to be here to stay for the foreseeable future, the anticipated long-term effect is that home movers are more likely to consider buying new build more energy-efficient properties. Rising energy costs are likely to encourage people to move to a home that is lower cost to run both immediately and in the long term, particularly as there is no clarification from the government as to what will happen once the current energy price cap comes to an end on 1 April 2024.”
According to the Home Builder’s Federation (HBF), heating bills in sustainable new build homes are 59 percent cheaper compared to older properties. New build properties (houses and flats) save an average of just over £2,000 per property each year, with the average annual running costs for a new build totaling £1,500 compared to an average of £3,570 for older properties.
“Although interest rates are rising, people can shop around for mortgage deals and fix payments. This is far more difficult when it comes to energy suppliers. As people look to manage their costs beyond the initial property purchase price, more energy-efficient properties are likely to offer some level of control when it comes to managing future financial outlay. We, therefore, expect that demand for our new build property conveyancing services to rise over the coming months and years.”
The demand for new builds as well as the increase in construction costs is reflected in their prices. Between 2021 – 2022, the prices of new build properties in Yorkshire and The Humber increased by 21.4%*.
“The increased cost of new builds is not likely to put off home buyers. On this basis, I don’t believe we will see a huge crash in the housing market, but rather a shift in what people want to buy. There will also be a percentage of people that will stay in their existing homes and rather than move, spend money on making their existing homes more energy efficient.”
The demand for its conveyancing services has created a new full-time role within the company. Mason Thomas Law is currently recruiting for a conveyancing Assistant. For details of the role or the company’s conveyancing services, contact us on 0114 294 5360 or message us directly here.