June is over and where did that month go? The mid-point of 2022 is pivotal in the property calendar – with six months of trading behind us. All eyes are on the market’s momentum and whether demand is being maintained.
Our first indication on how brisk trade is comes from analysis by a comparison site. GetAgent found 1 in 10 homes were selling within 2 weeks of launching to market. In areas where there was a shortage of properties for sale, this figure was 1 in 5 properties.
Government figures confirm price surge
While many house price indexes reflect activity in the previous month, there is one version that is published with a delay. The Government’s own house price index from its Land Registry department reflects the price paid for a property at the time of completion. It is, therefore, widely regarded as the most accurate of the indexes.
Double digit price growth
The Government’s latest data reflects property completions until the end of April. It shows house prices in the UK has risen by 12.4% in the year to date. This was up from a rise of 9.7% in March, illustrating how price appreciation has gained pace. The data also put the price of an average UK home at £281,161.
While this retrospective analysis formalises the red-hot property market experienced in 2022, future movers will be more concerned with what’s happening now. Rightmove’s real time data gives an indication of the current state of play. The portal says the average price of a property coming to market has hit a new high.
The revised average price of £368,614 marks the fifth consecutive record of the year. The devil is in the detail, however. Prices have risen a modest 0.3% in the last month, showing that while there is still room for appreciation, the rate of growth is slowing.
This comes as no surprise, as market conditions are following a familiar pattern. We expect a slight cooling of the market when the Bank of England raises the interest rate. In June, the rate increased by 0.25 percentage points to 1.25%. Concurrently, we are entering into the peak summer months when activity begins to moderate.
These factors, however, are not dampening the appetite of buyers and sellers. Rightmove’s analysis also found demand for properties remains strong. In fact, demand is more than double (+113%) the pre-pandemic five-year average seen in May. By the end of the year, the portal forecasts house price growth will rest at around 5%.
Another rise in rental values
The rental market continues to mirror the sales one. Figures from May 2022 are the most recent to date, with HomeLet’s index showing the average rental price for a new tenancy in the UK is now £1,103 per calendar month. This is a rise of 1.1% when compared to values in April.
While the month-on-month rise is moderate, a true reflection of how the rental market has changed can be gained from annual figures. HomeLet reported that rents rose 10.6% between May 2021 and May 2022, with every UK region seeing annual growth above 5%.
White Paper sets out new lettings laws
Although sales and rental values are of immediate interest, June was also a month to look ahead. The Renters’ Reform Bill finally yielded its associated White Paper. Entitled Fairer Private Rented Sector White Paper, this document lays down how lettings law will change in the coming months.
Confirmed is a ban on Section 21 evictions; the end of fixed-term tenancies in favour of periodic ones; a fairer approach to tenants with pets, children and a benefits-based income; a new Decent Homes Standard; a new private renters’ ombudsman to resolve disputes, and rental rises that are capped to once a year.
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