Red Tape Update 2023 – Renters Form Bill – What does it mean for the Coventry Rental market?
The long awaited Renters Reform Bill which was included in the Conservative manifesto at the last election, still is yet to be made into law. However Michael Gove has recently said the bill is very much still in the pipeline and stated that it would be introduced in 2023.
What will the new laws mean for landlords and tenants in the Coventry area?
The headline pieces of legislation include the following:
The scrapping of section 21 eviction notices. Once introduced this would mean that landlords in Coventry would not be able to evict their tenants without reason.
Changes to the Section 8 eviction notice and new clarification on the legitimate reasons for issuing a Section 8. This should help Landlords (for instance) where they do find they have anti social or problem tenants.
A new single system of tenancy agreement which will replace the current Assured Shorthold fixed term tenancies. This would mean a tenant moving into a rental property in Coventry would not have to sign either a 6 month or 12 month contract, but would instead enter into a generic agreement which would be similar to the current periodic or rolling tenancy. It is argued that this type of agreement will favour both the tenant and landlord.
The stopping of discrimination against tenants with children or pets. So for example a tenant applying to rent a home in Coventry will no longer be able to be turned away on the grounds that they have a pet.
Tightening of the rules on discrimination against tenants who claim housing benefits.
There will likely be exceptions to all of the above, though this will not become clear until the legislation comes into force.
The Coventry housing market over the last three months is now becoming more ‘normal’ after the last couple of years of insane demand when the lockdowns started a race for space!
Even with the blackening economic doom-mongers forecasting a harsh slowdown in the British property market, the number of people buying and selling their homes is still very good for the time of year.
Whilst many homeowners are reducing their asking prices, it is not the 20% (some even said 30%) drop some property commentators and newspaper journalists had predicted.
Looking at the stats for Coventry for the last three months since the disastrous Truss mini budget – they make good reading.
Of the 978 Coventry properties that have sold (stc) since late September, the average length of time it took to achieve a sale was 36 days.
Interesting when you split it down by price, in Coventry:
Under £100k – 36 days
£100k to £200k – 29 days
£200k to £300k – 37 days
£300k to £400k – 49 days
£400k to £500k – 46 days
£500k to £1m – 41 days
£1m and above – 105 days
And by type:
Coventry Apartment/Flat – 40 days
Coventry Terraced/Townhouse – 35 days
Coventry Semi-Detached – 29 days
Coventry Detached – 43 days
The latest sold price data from the Land Registry shows that Coventry house prices currently remain 12.6% higher than they were 12 months ago; the rate of growth has dropped significantly.
Last month, Coventry house prices dropped by 0.3%; thus, we are seeing the first sign that the property market is starting to cool.
With interest rates at 3.5% and further increases likely in 2023, that will undoubtedly spur ongoing cooling in Coventry property values yet it’s doubtful we will see the Coventry property market go into the deep freeze that many doom-mongers were predicting.
As I said in recent articles on the Coventry property market, we will see a 5% to 10% reduction in Coventry house prices over the next 12 to 18 months.
That will only take us back to the prices achieved in mid/late 2021 or early 2022 (depending on the property type).
Landlords have experienced double-digit rent growth in the last 12/18 months with a shortage of rental properties coming onto the market. I cannot see this changing in the short term, so I expect rents to be a further 10% higher by Christmas 2023.
Last week I stated it is not always wise to only focus on house prices but also take reference from the number of property transactions completed that feed the fire of the British property market.
For example, in March 2021, 135,670 properties sold, yet a month later, it dropped to 87,600. A couple of months later, it rose again in June 2021 to 165,290 homes sold (for it to drop to 64,000 in July).
Whilst this is good news for estate agents and removals companies, it can skew the property market and put undue pressure on the property market (pressure which could cause a housing crash if not put under check).
Like most things – slow, steady and consistent is the preferred option for the property market. Throughout 2022, the number of properties selling in the UK has been a steady average of 68,832 per month, ranging from a low of 61,800 in January 2022 to 72,200 in July 2022.
This consistency will continue into 2023 and a return to a more ‘normal’ housing market.
One final thing I have noticed about the Coventry property market in the last six months is the number of larger properties coming onto the market that last sold over 25 years ago.
Homeowners in their 20s, 30s and early 40s tend to move every five or six years, yet when they reach their late 40s and 50s, they tend to stay put for longer. These properties only tend to come on the market when people pass away or must be sold for nursing home fees.
These mature homeowners are downsizing for several reasons. Their children have flown the nest and they’re rattling around in homes with accommodation they don’t need. Many are being driven to sell their large homes in light of mounting energy bills, high inflation and never-ending maintenance costs that larger properties demand.
The second reason is that the recent rises in Coventry house prices has meant the money released to downsize has grown, meaning if these mature homeowners sell up and cash in to more manageable properties, the amount of money released is quite impressive.
In conclusion, 2023 is going to be a more ‘normal’ year, akin to the 2016 to 2019 years. Coventry homeowners need to be realistic with their pricing, yet as over eight out of ten sellers buy another home, the one you buy will be lower.
If you are considering selling your Coventry home in 2023 and would like a chat about your options, feel free to drop me a line or call the office.
I often get asked what is going to happen to Coventry house prices.
Many things affect house prices, and it comes down to simple supply and demand.
On the supply side of the equation, in the short-term, the number of people wanting to sell their property at any one time has a massive effect on house prices.
In 2007, the number of properties that came onto the market in Coventry jumped drastically. In January 2007, 2,546 properties were available for sale in Coventry and by October in the same year, that had risen to 3,364 properties.
This flooded the Coventry market with houses to buy whilst, at the same time, the banks almost stopped lending money because of the Credit Crunch, thus causing the house price crash of 2008.
Also, on the supply side of the equation is the total number of houses in the whole country (irrespective of whether they are on the market or not). This is an essential factor in house prices, although that has a longer-term effect. Governments can control the number of properties being built with changes in planning regulations, incentives for builders and the buyer schemes such as the Help to Buy plan.
On the demand side of the equation, property values typically rise if homeowners believe they will be wealthier in the future.
Typically, that occurs when the whole country’s economy is performing well as more Brits are in work and salaries are higher. The opposite is also the case when the economy goes into recession; people tighten their spending, lose their jobs, and thus, house prices drop. Inflation will affect British household budgets (because if more of the household budget is going on increased bills, there is less available for mortgage payments).
Another factor on the demand side for housing is when the population increases (through people living longer or increasing net migration) or when the divorce rate increases (making one family household into two single-person households). As always, rising demand typically means higher house prices.
One aspect of the demand side of housing that the Government can control is the taxation of moving home. In the late spring of 2020, the Government vastly reduced the tax (Stamp Duty) paid to buy a house, saving many home buyers thousands of pounds.
Also, on the demand side, property values usually increase if more homebuyers can borrow more money with a mortgage to buy their home.
The more banks and building societies can offer mortgages, the more homebuyers can buy their future home, thus raising house prices.
However, the constraint is the amount a home buyer can borrow on a mortgage.
What someone can borrow depends on what they earn and if they can afford the monthly mortgage payments. The level of mortgage payments is dependent on three things.
How much you borrow
The interest rate charged
The length of the mortgage
The lower the interest rates are, the lower the cost of borrowing to pay for your house is and thus more people can afford to borrow money with a mortgage to buy a home, meaning house prices tend to go up.
Coventry house prices have risen by 84.16% between 2010
and today, mainly fuelled by low interest rates.
So, looking at everything above, apart from Stamp Duty and the incentives for buyers (which historically have made a minimal difference), the Government in the short-term, irrespective of who the Prime Minister is, makes little difference directly to house prices.
The most significant short-term factor which directly
affects house prices is interest rates.
However, the Bank of England (not the Government) sets the interest rate for the UK economy. That means the Government (and Rishi as PM) cannot directly make any differences in house prices (apart from the points raised above).
Yet, indirectly, as seen with the Liz Truss/Kwasi Kwarteng Mini-Budget catastrophe only a few weeks ago, what the Prime Minister (and their Government) does can make a massive difference to interest rates and, thus, the property market and house prices.
Since December 2021, the Bank of England has been slowly raising interest rates to combat inflation. Unfortunately, the downside is that it increases the mortgage rates homebuyers must pay if they are on a variable-rate mortgage or coming off a fixed-rate deal secured a few years ago.
As 17 out of 20 homebuyers have a fixed-rate mortgage, when a bank or building society calculates a 5 or 10-year fixed-rate deal, they consider what the Bank of England interest rate is today, but they also consider something equally important, something called the ‘swap rate’.
As Coventry homeowners and landlords, it is vital you should be aware of the swap rates as they are based on what the global money markets think future UK interest rates will be.
If the swap rate rises, then mortgage lenders will increase their rates on the mortgages they offer, and by doing so, (as discussed previously in this article), increased mortgage rates will affect affordability and, thus, house prices.
So, what affects UK swap rates? Mainly one thing, the price of government debt in the form of gilt yields
Given the vast increase of planned government debt originally announced in that mini-budget by Truss/Kwarteng, the money markets who would be lending the Government the billions of pounds to fund those tax cuts got worried the Government wouldn’t be able to pay back such a rise in borrowing, so wanted a higher rate of return on the money they were lending the Government.
That return is measured in the ‘gilt yield rate’, and the gilt yield rate directly drives the ‘swap rate.’
That rise in the gilt yield rate/swap rate was the main reason mortgage rates rocketed after the mini-budget and helped in the collapse of Liz Truss’s Prime Ministership.
So, what can Coventry homeowners expect in the coming weeks and months with gilt/swap rates?
Rishi Sunak’s first job was to re-establish confidence in the money markets for UK plc. During the summer, the 5-year gilt rate rose steadily from 1.6% to 3.5%, in line with the general rise in Bank of England base rates. Yet when the mini-budget was delivered on the 23rd of September 2022, that rose almost straight away to 4.6%.
That meant every mortgage rate jumped in price by
1 to 1.5% almost overnight.
At the time of writing, the 5-year British gilt yield has dropped to 3.5%, and the others have either dropped below their pre-mini-budget rate or were moving in that direction, depending on the gilt type.
The gilt rate (which directly affects the swap rate, which in turn, directly affects mortgage interest rates) could drop further, subject to what Rishi Sunak and his Chancellor Jeremy Hunt have planned in the Budget (and supplementary report from the Office for Budget Responsibility) on the 17th of November 2022.
A drop in the gilt/swap rate is vital for any Coventry homebuyer buying a house or Coventry homeowner re-mortgaging to a new mortgage deal. Why? Because …
with the average Coventry home worth £242,731 (a rise of 7.89% over the past year), each 1% extra in the mortgage rate would cost every Coventry homeowner an additional £202.28 per month.
So, what does this all mean for Coventry house prices, then?
Greater certainty will keep the volume of housing transactions ticking over, yet not inescapably Coventry house prices.
In my blog articles on the Coventry property market, I believe Coventry house prices will be lower in 12 months, and I expect Coventry prices to return to where they were in the late spring/early summer of 2021.
And why is that? Unlike the 2008 Credit Crunch house price crash, today, the country has very low levels of unemployment and very well-capitalised banks (because the Bank of England subsequently forced them to keep lots of cash in their banks to cover downturns). Therefore, I don’t anticipate the kind of double-digit house price decreases seen 14 years ago.
If you would like to pick my brain about the Coventry property market, be you a potential Coventry first-time buyer, a Coventry homeowner looking at your options on re-mortgaging or selling, or, in fact, anyone with questions, don’t hesitate to drop me a line. I will gladly share my thoughts and opinions without cost or obligation.
Coventry Property Prices Have Risen by 406% Since 1995
“Tell me what is happening to the Coventry property market”, asked the friend of a friend at a recent do I went to in Coventry (after finding out I was an agent in Coventry).
I always reply, “It depends if you are buying, selling or both”.
The Coventry property market is like a seesaw. For the last two years, it has been quite firmly in the realms of a 90% seller’s/10% buyer’s market.
However, unless you are a Coventry buy-to-let landlord, Coventry first-time buyer, or executors selling a deceased person’s estate, most home movers are both (i.e. they are both sellers and buyers).
So, what determines where we are on the seesaw of a seller’s market or a buyer’s market?
It comes down to simple supply and demand economics. i.e. the number of properties on the market versus the number of buyers in the market.
Like when someone sells goods or services, it’s the same with property. So, when we have a low supply of properties on the market and high demand for properties to move into (like we have had for the last two years since the end of lockdown one), house prices go up.
Coventry house prices are 8.6% higher than a year ago.
The other side of the coin was seen in the Credit Crunch years of 2008/9. Many people wanted to sell their houses in Coventry, yet the banks weren’t lending, so people couldn’t buy. This meant the supply of property on the market exceeded demand; hence Coventry house prices dropped by 16% to 19% in 18 months (depending on what type of property you were selling) as we had a 20% seller’s market / 80% buyer’s market.
Whilst demand and supply are the key driving force on the balance of the buyer/seller’s market seesaw, it is not the only influencer of the property market. The price band is also an essential determiner of house prices, albeit over the longer term.
To show this, initially, I will go back to 1995 to ascertain what has happened to average house prices over the long term in Coventry.
The average Coventry house price has risen from £45,141 in 1995 to £228,420 in 2021, a growth of 406%.
Interesting, when you compare that against the national figure of 407.2%. Also, looking at where our local authority stands against other areas, we are 159th out of 331 local authorities in England & Wales for house price growth.
It’s called the property ladder for an excellent reason, and the health of the whole Coventry property market is very dependent on those bottom rungs of that ladder.
Therefore, looking at the data for our local authority, paying particular attention to the lower end (in terms of price), some intriguing data comes to light. It is crucial as the lower end of the property market (in terms of price) is a good bellwether for the whole Coventry property market.
So, I looked at the following …
Lower 10th Percentile of the Coventry housing market – i.e., the bottom 10% in terms of the value of properties sold – e.g., small apartments and ex-local authority properties in the less popular areas, which mainly attract buy-to-let landlords.
Lower Quartile of the Coventry housing market – i.e., the bottom 25% of Coventry property in terms of their value, e.g., first-time buyer homes and mid-market buy-to-let property.
… and if one looks at our figures for Coventry and the whole local authority, you can see the three parts (lowest 10% / lowest 25% and overall average) have performed quite differently.
The average value of a Coventry property sold in 1995 in the lower 10thpercentile (i.e., the bottom 10% of the Coventry property market) was £23,000, and in 2021, it was £130,000, a growth of 465.2% (compared to the national average of 428.4%).
The average value of a Coventry property sold in 1995 in the lower quartile (i.e., the bottom 25% of the Coventry property market) was £31,000, and in 2021, it was £162,000, a growth of 422.6% (compared to the national average of 417.7%).
Some of you might be asking yourself, what do all these different figures mean to Coventry homeowners, first-time buyers and landlords?
As the overall average is below the lower 10th percentile and lower quartile growth figures, the middle to upper market in Coventry has performed worse than the lower end in terms of house price growth since 1995.
The thought I am trying to get across to every Coventry homeowner/buy-to-let landlord is that there isn’t just ‘one’ Coventry property market.
There are markets within markets – almost like a fly’s eye. It is essential not to look at just the headlines but delve deeper when considering what is really happening and not to just look at the overall averages.
As we enter the height of the summer, the Coventry property market seesaw has started to change ever so slightly, changing from the 90% seller’s/10% buyer’s market we have had in the last two years to more of a 70% seller’s/30% buyer’s market.
With that in mind, if you can spot trends before anyone else is aware of them you could find yourself some potential Coventry property bargains.
27.3% of Coventry Property Sellers Reduce Their Asking Prices as the Property Market Starts to Return to Equilibrium
419 of the 1,536 properties on the market in the Coventry area have had a price reduction in the last 3 months.
The average reduction has been 5.6% of the original asking price.
This is great news for Coventry home buyers and Coventry buy-to-let landlords, strangely Coventry house sellers as well.
The last couple of years of the Coventry property market has seen some amazing prices being achieved with multiple offers and many properties selling for way over the asking price.
Yet, as I have been writing about the Coventry property market over the last few weeks, the tide is beginning to turn, and the pendulum swing more towards a balanced Coventry property market as more homeowners in the Coventry area (CV1 – CV7) have been reducing their asking prices.
Of the 1,536 properties for sale in the Coventry area,
419 have been reduced in price in the last 3 months.
This can be broken down as follows…
Price Range of the Coventry Property
Number of Price Reductions in Last 3 Months
£0-£50k
1
£50k-£100k
13
£100k-£150k
46
£150k-£200k
61
£200k-£250k
72
£250k-£300k
76
£300k-£350k
44
£350k-£400k
38
£400k-£500k
32
£500k-£600k
13
£600k-£750k
12
£750k-£1m
6
£1m-£2m
5
So why is this important and why is this good news, even for Coventry house sellers?
Property industry statistics show that 5 out of 6 house sellers will buy another property and over 80% of those sellers will move up the property ladder.
When you move up the property ladder, that normally means you pay more for the one you want to move to (that’s why it’s called the property ladder).
So, whilst you won’t be getting as much for yours as you might have done earlier in the year, you won’t have to pay as much for the one you want to buy (and the price difference between the two properties will be smaller – meaning you will end up saving money because of these reductions).
Therefore, what is the level of reduction being seen in the Coventry property market?
The average percentage of the price reduction in the
Coventry area has been 5.6%.
I must stress house prices/values in Coventry haven’t dropped 5.6%, just the asking prices of some of the properties on the market.
This is good news for Coventry first-time buyers and landlords, as they will be more likely to buy a property at a more reasonable price. Whilst, as I explained above, this is also good news for sellers as most of them will end up paying less for the higher priced property they end up buying after selling theirs.
So, what should Coventry homeowners be aware of if they are selling their home now or in the future?
For me, it is important that I inform all Coventry property owners of the real story. This enables them to judge for themselves where they stand in the current Coventry property market, thus enabling them to make better informed decisions.
You see some Coventry estate agents will deliberately over inflate the suggested initial asking price to the house seller, because it gives them a bigger chance to secure the property on that agent’s book, as opposed to a competitor.
This practice is called overvaluing.
Now of course, each Coventry homeowner wants to get the most for their Coventry home, yet some estate agents know this and prey on those Coventry house sellers.
You might ask, what is the problem with that?
Well, you only get one opportunity at hitting the Coventry property market as a new property. Everybody has access to the internet, social media and the four main property portals (Rightmove, Boomin, On The Market, Zoopla), and your potential buyers will know the property market like the back of their hand.
If you have a 2-bed Coventry semi that is on the market for a 3-bed Coventry semi-detached house price … those Coventry buyers will ignore you.
Your Coventry property will stick on the market as your potential buyers keep seeing your property on the portals each week.
These buyers will then start to believe there is something wrong with your property and dismiss it even further. That is until you, as the house seller, reduce your asking price. The issue is that sometimes these buyers will think something is wrong with your home and could bid you down even further, meaning you will get less even though you asked for more! (This was backed up by some research done by Which?).
Now according to research by Denton House, the average British house buyer only views around six properties before buying – so please don’t assume viewers will come round your optimistically priced (i.e. overvalued) Coventry home, thinking they will knock you down – quite the opposite – they just won’t view your home in the first place.
And you know that because I bet you have done the same
yourself when searching for property.
So, all I suggest is this … be realistic with your asking price to start with.
Do that and you will sell your Coventry property at a decent price to a decent buyer … first time, every time – enabling you to move onto the next chapter of your life.
If you know of anyone currently selling their home in the Coventry area and finding things difficult, please share this article with them as it could be of interest.
A think tank has looked at compelling evidence and found that the current boom isn’t in fact driven by the Stamp Duty Holiday.
If you’re a home owner, this is exciting news and suggests that any predicted lull in activity and prices is not going to materialise.
The Resolution Foundation found that those areas that would have benefitted most from the Stamp Duty savings didn’t enjoy the best price increases, whilst other areas that received negligible benefit from the holiday had much higher price increases.
So if the current boom isn’t driven by tax savings, what is causing all of the gains? It would appear that the main driving force is very low interest rates with many lenders offering deals below 1% and the increasing availability of finance and higher loan to value deals.
With no current indication that lending rates are likely to go back up again any time soon, this suggests that the market will remain buoyant and strong going into 2022.
If you’re buying this is excellent news as you’ll save thousands in interest payments whilst those who are selling will benefit from higher prices, especially if you’re downsizing.
Great news all round in fact. For further help and advice on selling or buying your next home call our office and speak to an expert. We’re here to help you.
What a few weeks it has been, with Southgate’s men providing a welcome distraction from the ongoing nightmare that is Covid 19. Whether you are a football fan or not, it’s hard not to be inspired by the England football team and their excellent run of form in the Euros, with reported viewing figures of 20m plus for the Ukraine match it really seems to have caught the nation’s attention. The Germany game was a particular highlight for me not only for the incredible result but seeing the atmosphere in stadium, with actual fans in attendance!
Whilst Gareth’s men have been performing on the pitch It’s been a very busy period for the property sector at home. At the end of June we saw the close of the stamp duty holiday from £250,000 up to £500,000. As a result, there was a rush of completions as pressure mounted to keep chains together and ensure sales went through. This was a stressful time for everyone concerned. I wanted to say a big thank you to all our clients who we manged to help negotiate through this particularly tricky period. Also, a big thank you is due to all our friends in the conveyancing world – I expect many of you will be booking well deserved holidays very soon! Remember There is still a stamp duty holiday up to £250,000 until the 1/10/21 when we then return to the pre-pandemic rate of band of 0 Stamp Duty up to £125,000.
We have experienced a record number of transactions this year and the selling conditions even post the Stamp Duty holiday appear to be very good, this is largely due to a shortage of properties on the market. So, we are hopeful that although for most people stamp duty has returned, the market is showing no signs of slowing down.
Something that grabbed our attention this week was a post on social media sharing an appeal from Thorns Primary School to raise money to repair their swimming pool. Having learnt to swim there myself (a long time ago), we just wanted to wish them the very best of luck with their fundraising, we have shared the link to the on our social media pages.
Finally, by the time this article is published we will have played our semi final against Denmark and I hope we will find ourselves looking forward to a final on Sunday. Surely, it’s coming home.
With the stamp duty holiday due to end in a few short weeks, those wanting to take advantage of this tax break are rapidly running out of time. In recent days and weeks there has been some negative commentary from various quarters about “cliff edges” and the “race to beat the deadline”. Will there be a ‘stamp duty cliff edge’ as predicted?
Whilst you may well agree that paying large amounts of tax isn’t the most exciting proposition, the reality is that stamp duty has been a part of English Law since 1694 when it was introduced during the reign of William and Mary in order to raise funds for the war against France. It was introduced on conveyances of sale, including the sale of land in 1808. So for most homebuyers Stamp Duty has been a reality since we purchased our first home and remains so today.
With the prospect of having to pay Stamp Duty again soon, a few buyers and sellers may decide not to move home after all and stay put as they were only really moving in the first place to save some money. Lucky them.
In the real world, most of us move home for a variety of practical reasons: we need a bigger house, we need a smaller house, we want a garden, we need more bedrooms for our growing family, we are getting divorced, a relative has died, the house has been repossessed, we want to live closer to Grandma, the neighbours are a nuisance, we want a house with a view, we prefer a south facing garden, we need to be by a good school, our employer has moved our job location, etc. The list goes on.
The majority of us don’t have the luxury of deciding to move because “there’s a stamp duty holiday”. So in the real world, the property market will march on and it will be business as usual. 2021 will no doubt see a resurgent economy and a resurgent housing market.
For further advice on your property sale or rental speak to one of our friendly team of experts.
Whether you can believe it or not some of the most recent statistics released from Rightmove have revealed some really surprising and unusual activities over our Christmas holiday’s! I’m not talking about “Pie Face” or “Charades” here, I’m simply talking about online property views.
Rightmove reports show a whopping increase of over 20% activity levels between Christmas and the New Year.
The last published statistics revealed that on On Christmas Day there were nearly 14 million page views and over 10,000 people took time out from the festivities to send emails to agents.
On Boxing Day it gets traditionally busier, with page views jumping to over 25 million.
Views peak on New Year’s Day, with an average of over 38 million page views (This is no doubt due to many being unable to even step out of their armchairs!).
What does this really tell us? Well, unarguably it shows that when we have time, we use it. Christmas and more specifically the New Year, with the hopes and ambitions it promises (who can’t fail to at least have hopes and ambitions for the year ahead whether realised or not!), is time for prediction and planning. Physical viewings are not so common, but planning ahead and looking at what’s available, can be the spark that lights the fire. Having your property on the market over the Christmas period doesn’t mean that Mr and Mrs Smith are going to disrupt your Figgie Pudding and Brandy Snaps. It means simply that they will likely plan to visit your house after Christmas.
Seeing your home for sale may persuade them to sell their own property and enable them to move forwards. Yours could be the property that instigates those decisions. And more importantly, yours could be the property they buy as well.
Lastly, we just wanted to wish all our customers past, present and future a very Merry Christmas. 2020 has been such a testing year for everyone and we wish you all a happy, healthy and hopefully successful 2021!
The UK housing market starts autumn with momentum following a post-lockdown mini-boom, making summer 2020 busier than usual. Buyer demand has soared, up 34% on a year ago according to Zoopla, while supply to the marketplace is at its highest level since March 2008, according to Rightmove. Over 81,000 property sales were recorded in August, which is up 15.6% on July, with competition in the market leading to one in eight properties selling at or above asking price. Larger properties and those with gardens are proving immensely popular, with the impact of COVID-19 set to have a lasting change on our home and work lifestyles. Price growth is strongest across the East Midlands and the North West, but across all regions the trajectory is positive.
Both the economy and consumer confidence have both shown signs of improvement throughout the summer. The economy grew by 6.6% in July (ONS), however it remains over 11% lower than pre-lockdown, while consumer sentiment continues to rise, albeit slowly. Recovery remains cautious as the government grapples with balancing the economy and public health. Stamp duty holidays across the nations offer a saving for many buyers, however, while interest rates remain low, a reduction in high loan-to-value lending products is impacting first-time buyers.
In the lettings market, as with the sales sector, demand for rental property increased over the summer, although new instructions remain muted, a continuation of the pre-lockdown trend. Average rental values across the UK rose by 1.5% in the year up to August, and yields remain attractive. Increased demand and a shortage of supply in many areas should help underpin rental values over the coming months. Just 13% of tenancies expire during the final quarter of the year but landlords will be keen to avoid unnecessary void periods.
Properties are selling quicker than they did a year ago, and latest mortgage approvals suggest the market is returning to more ‘normal’ levels. However, the forced pause in the housing market means 2020 sales levels will no doubt end below those of 2019. UK house price growth is at its highest level in over two years and revised forecasts anticipate property prices will end the year 2% higher, a significant reversal to the negative expectations anticipated as the market reopened. Interest rates are predicted to be held at 0.1% until 2022 offering hope of favourable buying and selling conditions for the foreseeable future.
