As we progress through the third quarter of 2023, it’s interesting to note the broader trends in the property market. While the frantic conditions that accompanied the pandemic are over, the moving market is brisker than it was four years ago. To illustrate, Zoopla found property offers are received quicker now when compared to pre-Covid times.
Zoopla’s observations suggest there’s a band of keen purchasers in the market - Rightmove concurs. It found buyer demand is running 3% higher than it was in 2019. Those purchasers, however, currently have less choice as the number of properties for sale is 12% lower now when compared to 2019.
House prices are stable
Working in purchasers’ favour is adjusting house prices. Rightmove’s latest House Price Index revealed the average asking price attached to a new-to-market property fell by an average of 0.2% in July. For comparison, the average asking price is usually static at this time of year.
Slim annual house price increase noted
When looking at property prices on an annual basis, we’re still clinging on to an increase. There has been a 0.6% rise in UK house prices in the last 12 months, according to Zoopla. It’s very modest growth compared to the double digit rises seen in recent years but the soft landing that was forecast has actually materialised.
There’s also heartening news from the financial sector. Despite the Bank of England raising the interest rate to 5.25% in August, the markets had already factored in the new figure. Prudent planning means we shouldn’t see mortgage rates shoot through the roof.
In fact, many lenders have started reducing rates. As a result, home loan rates are expected to stabilise then hopefully dip below 6% in the imminent months. There is also hope that rates may be closer to 5% in 2024.
A more tempered mortgage market is also being helped by the direction of inflation. The most recent fall to 7.9% has steadied financial sector nerves. Experts believe the bigger-than-expected inflation reduction will prevent a housing market slump.
In other news, the Scottish National Party has floated an idea that may set a brave new property precedent. It is thinking of banning the sale of properties with gas boilers, compelling people to eventually switch to heat pumps. Such a ban would be part of a wider eco drive to force all Scottish properties to achieve an EPC rating of C or above, with some homes downgraded from their current rating.
Landlords potentially offered an EPC lifeline
While energy efficiency measures pick up pace in Scotland, it’s a different story in England and Wales. During a Sunday Times interview, Housing Secretary Michael Gove said he wants the Government to ‘relax the pace’ of EPC reforms in the private rental sector. It’s the biggest indication yet that landlords will have longer to ensure all properties with new tenancies have an EPC rating of at least a C by 2025.
What is certain in lettings is the correlation between an undersupply of property, tenant demand and rent rises. The latest figures from HomeLet show the average rent in the UK is now £1,229 per month. This figure is up 10.4% on the same time last year, and up 1.3% from its last report.
It was Scotland that posted the highest monthly rental increase between May and June - a 5.5% rise. It was way ahead of those that took second and third spots. These were Greater London and the West Midlands, both with monthly rent rises of 1.9%.
Rightmove added detail to the lettings picture. It found the average property available to rent is finding a tenant in 17 days - the speediest time frame since November 2022. The portal also found tenant demand up by 3% compared to 2022.
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