August is usually a time for lazy days and annual holidays but this year, the month failed to read the script. There has not been the traditional pause in home moving activity this summer. As a result, there are some surprising statistics to digest.
The first came from Nationwide, whose August House Price Index revealed something uncharacteristic for the summer sales market. There was a 0.8% month-on-month rise in house prices since July’s report. This showed that when demand outstrips supply directly, house prices react – whatever the month.
August’s house price rise bucks the trend
With the cost-of-living crisis biting and mortgage repayments rising for some borrowers, experts expected to see the rate of house price growth slow or even stall in August. This prediction wasn’t a stab in the dark either, with increases easing from 0.9% in May to 0.3% in June and just 0.1% in July. Unexpectedly, house price growth was eight times the rate seen in the previous month.
More than £2,500 added to the average house’s value
Many homebuyers find it hard to measure price growth in percentages, so the Nationwide’s average house price is a tangible way to see how values are changing. The average UK home now costs £273,751, compared to £271,209 in July. The building society adds that in the past two years, the average house has risen £50,000 in value.
So what does the future hold for house prices? One of the most commonly asked questions is the possibility of a market crash. We agree with the experts at Zoopla, who say a house price collapse isn’t on the cards. Instead, the portal’s forecast for house prices to rise a further 5% over 2022 sounds plausible. Based on Nationwide’s latest average, that’s an extra £13,688 added to a property by the end of the year.
Zoopla’s latest market report casts further light on August activity. It found first-time buyers are currently the largest group actively purchasing, representing 35% of all transactions. This may be, in part, down to a looming deadline, with the Help to Buy equity loan scheme closing to new applications on 31st October 2022.
Zoopla’s report also contained encouraging news for all buyers this autumn. The portal says stock levels are on the rise. In fact, purchasers currently have the greatest choice of homes for sale since May 2021.
Buyer choice will also remain high throughout autumn as activity returns to more sustainable levels. Although Zoopla says demand is well above the five-year average at +17%, it is down from +54% recorded in May 2022.
A rise in the number of rentals available
August’s rental market also yielded interesting statistics, with both Zoopla and Rightmove agreeing on one thing – supply. The former reported that the number of landlords purchasing buy-to-lets is on the rise, and the latter says the number of new rentals coming to market continues to improve.
In fact, Rightmove says the number of ‘to let’ properties rose 3% in July versus June. It also found ‘bills included’ has become the most searched for rental term, taking over from ‘pet friendly’. In 2021, ‘bills included’ was outside of the top five most frequent search terms.
Rents continues to rise in high summer
When it comes to how much tenants spend on rent, HomeLet’s newest Rental Index reveals all. Its August data has the average price for a new tenancy in the UK at £1,143 per calendar month. This was up 1.4% from July.
Growth in the rental market almost matches that in sales. HomeLet says every UK region has seen the cost of renting rise on a monthly and yearly basis. When comparing 2021 to 2022, it is now 8.5% more expensive to rent.
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