The latest news from the property market

Prices and demand continue to surge, with Rightmove declaring it ‘the best ever spring sellers’ market.’ Asking prices rose by 1.7% last month, the largest increase in March since 2004 and house prices hit a record high of £354,564, breaking through the £350,000 barrier for the very first time.

There are a number of factors behind these rises, including the ongoing race for space, but it’s the imbalance between supply and demand that is the main driver, with demand currently running at almost twice the level of supply. According to Rightmove’s Tim Bannister (Director of Property Data):

“The imbalance between high buyer demand compared to low available property supply is the greatest that we have ever seen for the start of a spring market.”

As a result of those unprecedented levels of demand, 22% of sales are now being agreed within the first week of a property being listed on Rightmove’s portal and an astonishing 47% within the first fortnight. The biggest price increases have been occurring at the top end of the market, which was up by 3.8% in March, but it’s the second-stepper homes that are selling fastest, with 50.3% agreeing an offer within the first two weeks.

Wales saw some of the largest rises, where prices were up by 3.3% in March. In London, prices dipped by 0.4%. It was only a minor blip in the capital’s ongoing recovery, though - annual growth remains at a very healthy 6.3% and there was a 20% reduction in the amount of time a property spent on the market.

The buoyancy of the housing market is a little surprising, given the increases in the base rate, the rising cost of living and the war in Ukraine. Lender Nationwide believes this is the result of several factors – unemployment remains exceptionally low at 3.9% and is continuing to fall. Inflation may be rising, but so are wages. In addition, many buyers saved an extra £190bn during the pandemic (an average of £6,500/household), considerably increasing their buying power.

Affordability, though, is likely to soon become over-stretched, especially when interest rates rise again. And, with record gaps between the property types, buyers are already finding it difficult to trade up to the next level. The price jump between an average flat and a 3-bed house, for example, has grown from £12,000 to £25,000 since pre-pandemic 2019. Many commentators are therefore expecting the market to return to more normal levels of activity (and price rises) over the coming months.

HOUSE PRICES AND STATISTICS

All the indices continue to show strong monthly and annual growth, with many hitting record levels.

Nationwide: Mar: Avge. price £265,312. Monthly change +1.1%. Annual change +14.3%
Halifax: Mar. Avge. price £282,753. Monthly change +1.4%. Annual change +11%
Land Registry: Jan: Avge. price £273,762. Monthly change +0.4%. Annual change +9.6%
Zoopla: Feb: Avge. price £245,200. Annual change +8.1%
Rightmove: Mar: Avge. price £354,654. Monthly change +1.7%. Annual change +10.4% (asking prices on Rightmove)

BUY-TO-LET

As with the sales market, demand and prices continue to rise. According to the latest data from Homelet, the average rent hit £1,078 in March - up by 0.8% from the previous month and by 8.7% annually. In London, the average rent hit £1,770 and annual growth climbed to as high as 11.6%.

Commenting on the latest data, Andy Halstead, HomeLet & Let Alliance Chief Executive Officer, says:

“Demand will continue to outstrip supply, and when that is the case, rent prices will surely continue to grow. The March figures are a perfect example of this, with the average rental price for the UK rising almost an entire percentage point in the space of a single month.”

Unlike the sales sector, there is currently no end in sight for price rises in the rental sector, and a recent report commissioned by the National Residential Landlord’s Association (NRLA) shows why. The report’s data suggests that the imbalance between supply and demand is likely to get considerably worse, especially with the predictions of 1.8 million new households being formed over the next ten years. In order just to keep up, the supply of rental properties would need to increase by 227,000 per year until 2032. In London, the imbalance is even more acute. The report estimates there is a requirement for at least 85,000 additional rental homes per year and yet, over the last five years, London’s supply of rental property fell by 85,000. Unsurprisingly, the NRLA is demanding the Treasury finds ways to encourage investment in the sector.

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