UK Property Market Update: Q2 Review
The Selling Market
According to the latest data from Rightmove’s House Price Index, the average price of property coming to market has seen a sixth consecutive record this month, rising by 0.4% (£1,354) to £369,968.
The South East specifically, however, has bucked the trend seen across most of the UK (bar Wales, the South West & East Midlands) with house prices month-on-month remaining the same as June, but an annual increase of 9.3% highlights the strength of the market, with data also showing the average time taken to sell is 33 days.
Activity and demand remain strong in the market as buyer enquiries continue to exceed historically normal levels – which are now 26% higher than at the same time in 2019. Demand is down 7% compared to the frenetic market of June 2021, which was no doubt fuelled by the stamp duty tax holiday and pent up demand as the pandemic slowed down.
There are, however, signs that stock levels will continue to rise, with the current number of sellers up by 13% compared with July last year. This number, though, is still 40% down on 2019’s recordings. This shortfall should serve to maintain the higher prices seen across the UK for the coming months and into 2023. The gap is so wide that Rightmove has revised its 2022 yearly forecast, with 7% annual growth now predicted by the end of 2022 – up from the original 5% predicted.
The Bank of England’s decisions to increase the base rate of interest has seen lenders increase their interest rates across the board and when combined with record prices, mean that the average first-time buyer monthly mortgage payment for someone taking out a two-year fix is now 20% (+£163) higher than at the start of 2022, working out to £976 per month.
Rightmove predict that demand is likely to return to more normal levels in the second half of the year due to the rising cost of living and affordability concerns, however the prospect of further interest rate rises may drive some to act now to lock in a longer fixed-term mortgage rate. This is even more likely because the gap between interest rates for shorter and longer term mortgages has been closing in recent years, and they are now virtually the same. For example, the average interest rate for a 75% loan-to-value mortgage is now 2.9% for either a two-year or five-year fixed deal. Historically lenders offered a lower rate on a two-year fix, with a difference of as much as 1% between the two deals over the past five years.
The Rental Market
With regards to the rental market, private rents in the UK have hit another record high.
Outside of London, the average rental property is now listed for £1,126pcm. That’s 12% higher than the same time last year, and 19% higher than pre-pandemic. Inside London, the average rental property is listed for £2,257pcm, which is up 15.8% on this time last year. This increase means that national rents outside of London are rising at the highest annual rate Rightmove has ever recorded in 16 years of reporting. Rents have now risen by 19% – or an average of £177 – since the pandemic started just over two years ago.
By contrast, it took eight years pre-pandemic to reach the same level of growth, illustrating the rapid rise in asking rents since the start of the Covid-19 outbreak. Q2’s 3.5% jump is the second highest quarterly rise in 10 years. In the South East, the average rental price is now £1,611pcm, a quarterly rise of 5.0% and a yearly increase of 12.1%, with the average yield now calculated to stand at 5.3%.
For more details about the property market or where your requirements place you in the market, please visit any of our teams of Worthing and surrounding areas estate & letting agents to find out how Michael Jones can help you.
Content accurate at time of publishing.