JULY PROPERTY MARKET UPDATE

01 August 2022

An interesting month for the UK property market with supply remaining tight across the board. In London, the number of buyer enquiries increased by 7% although this should be noted this is bucking the national trend. Transactions remain 5% above their pre-pandemic level meaning that the UK housing market remains a buoyant one. 

So, what does this mean for investors? Looking at the stats, there’s a lot to like. According to data from lender Halifax, June saw a continued rise in house prices of 2.4%, albeit it was a slightly more modest rise than May’s at 3.1%. June’s rise put annual house price growth at 13%. Nationwide were more conservative at 10.7%, whilst Knight Frank has estimated 2022 will finish with an annual house price growth of 8%. Still, Halifax’s data shows the highest rate of growth in UK house prices since 2004 - and mortgage approvals remain steady. It seems the cost-of-living squeeze is, so far, not impacting the housing market, and is instead, “being felt by those on lower incomes who are typically less active in the housing market,” (Knight Frank). 

The top line is, price growth has slowed and buyer demand has eased, but supply remains constrained with 32% fewer homes on the market than 2019. It’s helpful to look at pre-pandemic comparisons to get an idea of how well the UK is recovering. Compared to pre-pandemic levels there are fewer properties currently on the market, but with transactions up and the recent announcement by the Bank of England that the number of mortgage approvals were back to their pre-pandemic level, suggests resilience in the market. 

Some commentators have also reported the ‘race for space’ easing, with buyers returning back to the UK’s major cities and conurbations, suggesting a return to a more normal housing market is underway.  

a look at London

In the three months to June, prices in Prime Central London (PCL) increased by 0.8% and by 1.5% in Prime Outer London (POL), taking POL’s annual growth to an impressive 5.1% although as ever, buyers should discriminate and buy smartly. To see our current London recommendations click here and we are looking forward to introducing some new London developments to our client base in September.   

In terms of London letting’s market, the market has got incredibly busy with all units RPA sold at Barratt London’s recently completed development in Harrow, Eastman Village, renting within days of coming to market at the full asking price. In the three months to June, rents rose in PCL by 4.7% and POL by 4.8%. Elsewhere in the country, strong rental growth was reported in East of England – including Essex. Knight Frank got straight to it when they said, “Supply is picking up modestly in pockets of London but not to the extent that it is anything other than a landlord’s market.” Great news for UK property buy-to-let investors.

What of august?

August will certainly be bringing an interesting development, no pun intended, as the Bank of England will relax its mortgage affordability tests, allowing buyers to borrow more, which Savills believes will “open up modest capacity for price growth over the medium term.” Previously, mortgages were assessed on whether a borrower could afford repayments if interest rates were to rise by 3%. In August, this will be reduced to 1% - and no doubt all eyes will be on its market effect. Certainly, we expect transactions to rise as a result, particularly amongst first-time buyers, exerting more pressure on supply, and therefore, sending house price growth solidly upwards.

THE RPA VIEW

Showing steady and sustainable house price growth with an extremely strong rental market, it’s a good time to buy London and surrounding markets. Reading developments both of which offer good value and excellent commutability on the newly opened Elizabeth Line. Scholars Quarter still remains very much in the spotlight with the Commonwealth Games starting, and strong growth reported in the West Midlands.  

As ever, we’re here to answer any questions you may have – and wish all of our clients a happy summer holiday.