- 20 June 2022
- Posted by: alettashawestates
- Category: UK Property Market
Although the number of UK property transactions is lower than this time last year, the UK property market continues to barrel along, at a seemingly indestructible rate due to soaring demand.
Of course, different sources state different positions regarding where the market is heading. No one knows exactly what will happen in the near future and with the current climate things could change very swiftly.
The market on average has been growing, especially over the last 6 months. This is based on an average for the whole of the UK. Regions and towns differ, but overall buyer enquiries are up 31% and mortgage approvals and sales are up by 12% and 11% respectively. However, there are half as many properties available to buy and stock levels are down 55% (Rightmove, HMRC, Bank of England). Stock levels remain very low by historic standards and consequently, prices continue to rise rapidly across all regions. The supply of new instructions entering the market nudged up slightly in last month as more potential sellers are tempted by record prices. On average, properties are selling subject to contract in just 31 days, the quickest time ever recorded. With competition for properties remaining high, Rightmove report that asking prices have hit their fourth consecutive record high in as many months.
The average price of property coming to market has hit a new record for the fourth consecutive month, rising to £367,501. This month’s increase of 2.1% (+£7,400) is the highest at this time of year since May 2014, and marks a national jump of £55,551 in asking prices in the two years since the housing market shut due to the pandemic.
This compares to a rise of just £6,218 in asking prices in the two years before the pandemic, and illustrates how the frenzied market activity has led to two-year price growth in cash terms, never before witnessed in over twenty years of tracking prices.
This fourth consecutive price record comes alongside a fourth successive interest rate rise, but this rate rise and other household economic concerns do not appear to have dented the motivation and urgency to move that are felt by many, though there are signs that the market is starting to ease.
Home’s data shows that house prices rose significantly in every English region, Wales and Scotland during the last month. Marketing times remain very low by any historic precedent. Higher prices appear to pose no significant obstacle, as one should expect during a period of rapid monetary inflation. Even the North East, formerly overwhelmed with stock and stagnating prices, has now entered a boom phase. Demand has decimated the stock for sale over the last year and prices are rising rapidly.
It is becoming clear that the Bank of England’s efforts to tame inflation are not working, with the Monetary Policy Committee (MPC) forced to raise interest rates for the fifth consecutive month to a 13-year high of 1.25%. Even by their own preferred measure (CPI), inflation is now 4.5 times their target rate and climbing. Of course, the unprecedentedly large and widening spread between mortgage interest rates and inflation specifically incentivises highly leveraged property purchases.
The number of buyers contacting estate agents is 14% down on the stamp-duty-fuelled market of this time last year, but is up by 31% on the more comparable market of 2019 (pre pandemic). The number of properties available to buy is 55% down on the levels seen in 2019, meaning that supply and demand look likely to remain out of kilter for at least the rest of the year. The number of sales agreed is up by 12% in the year to date compared to 2019 even with restricted choice, though is down 17% compared to the exceptional market of the same period last year. These numbers suggest that a lack of homes for sale rather than a lack of desire from buyers is what is dictating the pace of the market. New stock is most urgently needed in the mid-market sector of two and three bedroom semi-detached homes, which are seeing the most competition from buyers.