The Nationwide House Price Index reinforces what has been apparent in Oxford for the last few months. The almost 1% drop in August and stagnation over the summer would indicate that the number of people seeking to sell and those in a position to buy, is generating the inevitable downward pressure on values.
There does not appear to have been the flood of property onto the market to beat the change in capital gains; however the uncertainty about interest rates has reduced demand for investment property.
The trend towards variable rates continues; with those now on fixed rates at 36% compared with nearly 50% a year ago. The average cost of standard variable borrowing is 2.8% across the market. This will ensure further pressure from lenders to increase interest rates. The perfect storm; accelerating inflation, strangled lending and over-supply of property is not yet visible on the horizon, but the 20% downward adjustment to bring values to their long term norm of four times the average salary, could be triggered if there is no alternative to selling for those seeking to move or if interest rates increase.
College and County are still acting for people who have decided to let their existing property in order to rent something else as a direct alternative to selling and buying. This shift in thinking could, if wholeheartedly adopted, provide a safety valve to protect property values while long term trends catch up.