Barratt Developments gave us a trading update this week. Barratt is the largest house builder in the UK, building over 17,200 homes in 2021 and aiming to build between 18,000 to 18,250 in 2022, much attention is given to how they view the current trading conditions. The company informed us that the demand for new homes is declining. With higher borrowing costs and reduced mortgage products, reservations for new homes fell by a third from 281 last year to 188. But the company did state that it sees record numbers of inquiries, so are people just holding off, and standing on the sidelines?

Barratt informed us in February that everything was fine and that house prices have soared to new heights over the past year, with the average UK house price reaching a staggering £274,000 in January 2022. The fundamental shortage of housing supply in the UK had continued to push prices higher and even the end of UK government support schemes has not damped sales of new homes, so this slump in reservations is recent and due to the economic outlook of the general public, I’m not surprised. I think this could bounce back quickly with brighter macro-outlooks.

I see many sold signs on houses I pass and I’m happy I have not entered a contract at present. Predictions are that prices could slump 10% in 2023 ending the 13-year housing bull market, but those making these predictions seem to say the same every year for the past 13 years. Things can change quickly, and I want to see if all my indicators provide a signal that gives me confidence in predicting the direction of the market, either direction will present opportunities. Maybe, looking at this from another angle could make the securing of lucrative deals easier now if other investors are thinking the same and holding off.

Economic experts who said everything was rosy only a few months ago now state it’s inevitable that we are heading for a house market depression and anyone who has a fixed rate is coming to an end and is about to lose everything. I may be exaggerating, but that’s the impression I think the fear-mongering media want to achieve sometimes. Mortgage brokers have been inundated with calls this week from scared homeowners looking for safety. As Lance Corporal Jones says, “Don’t Panic”

All my properties except for one are fixed until 2025. The one is due to be mortgaged in May 2023. I could be running around now scared to death by the media, fearing that I will be paying 10% interest rates by May and ringing around trying to fix a deal, but I’m not. I sat calmly, watching and waiting patiently to see how things pan out. I have explored all possible outcomes and I am prepared for anything the market throws at me. I will meet these challenges head-on and take a proactive approach to them.

After reviewing our financial situation and preparing for even higher management costs to come, I reluctantly raised the rent of some properties this week in line with tenants’ tenancy agreements. I approached the subject with those tenants affected in an understanding epithetic manner surrounding the current cost of living crises. Even though this was a hard decision to make, I was pleased to find that the tenants were understanding.

Whatever the situation, I feel that I have a strong balance sheet to overcome any higher costs. I always knew the low-interest rates and quantitative easing would cause problems and was always mindful of my leverage. With the size of the government debt and the monetary system we have now come to rely on, it will not be long before we are at zero interest rates again, building up to a bigger crash later. The future could present many buying opportunities to ride the next bull run before that and I am positioning myself now to be able to take advantage of future deals.

All my properties except for one are fixed until 2025. The one is due to be mortgaged in May 2023. I could be running around now scared to death by the media, fearing that I will be paying 10% interest rates by May and ringing around trying to fix a deal, but I’m not. I’m sat calmly, watching and waiting patiently to see how things pan out. I have explored all possible outcomes and I am prepared for anything the market throws at me. I will meet these challenges head-on and take a proactive approach to them.

After reviewing our financial situation and preparing for even higher management costs to come, I reluctantly raised the rent of some properties this week in line with tenants’ tenancy agreements. I approached the subject with those tenants affected in an understanding epithetic manner surrounding the current cost of living crises. Even though this was a hard decision to make, I was pleased to find that the tenants were understanding.

Whatever the situation, I feel that I have a strong balance sheet to overcome any higher costs. I always knew the low-interest rates and quantitative easing would cause problems and was always mindful of my leverage. With the size of the government debt and the monetary system we have now come to rely on, it will not be long before we are at zero interest rates again, building up to a bigger crash later. The future could present many buying opportunities to ride the next bull run before that and I am positioning myself now to be able to take advantage of future deals.