SPRING CHEER
The desire to move remains on the agenda for many, with little sign at the moment that economic headwinds are impacting the property barometer dial.
So far, 2022 has started strongly. According to HMRC, sales volumes in January are predicted to be 10% higher than the long- term average recorded between 2012 and 2021, and except for a year ago, are the strongest since 2007. Buyer demand remains steadfast and is up 16% year-on-year. Added to that, property price growth continues to be sustained with Nationwide reporting that the annual price growth in the year to January was at its strongest in over 15 years. Rightmove reported the biggest monthly jump in the asking price of a newly- listed property since 1994 and when asked, the majority of agents are still expecting price growth over the next three- and 12-month period.
Looking specifically at the regional markets, at 5.5%, annual property price growth in London is stronger than the 3.1% evident a year ago, albeit lower than other areas of the UK. With office returns and hybrid working now firmly in place, there has been renewed interest in living in the capital.
London remains a city of choice for many domestic and international purchasers, ranking highly in many global league tables. Considered the World’s Best City, Europe’s Best City to Visit, the Best City in which to Live and Work, and the Best City for students¹, London’s joie de vivre ensures it’s always in demand.
Havering and Greenwich proved the fastest-moving markets in London omeHover the course of 2021, with more than one in every twenty privately-owned properties estimated to have changed hands. 2022 has started with more momentum in the capital. At 68 days, the average time taken to sell a property is four days quicker than a year ago and nearly two weeks quicker than in January 2020.
Although the quantity of property for sale remains low, with the Royal Institute of Chartered Surveyors reporting, barring the market closure in 2020, stock levels per agent are at a record low in January, there are signs of change. New listings in January rose 11% year-on-year, with Rightmove noting a substantial rise in home valuation requests; an indication that many are looking to sell before they buy in current conditions. These should feed through to agents’ books over the coming months. Historically, March is the strongest time to sell, with the highest number of buyer enquiries per property for sale.
Across the UK, governments are announcing their plans for ‘living with Covid’ and hybrid working is bedding. With economic growth of 7.5% over the course of 2021, the UK economy is close to its pre-pandemic level. However, consumer confidence remains on edge due to the rising cost of living. Increases in the cost of food and clothing, along with rising fuel and energy prices look set to squeeze many household incomes. Savings made during the pandemic may well prove a cushion in the short term and while interest rates may well rise from the current 0.75%, they remain low by historic standards.
An estimated 68%, have a mortgage to pay on their property. Therefore, any rise in the base rate of interest is a cause for concern. However, with nearly three-quarters of homeowners currently on a fixed-rate deal, and 94% of new loans being issued on this basis, many are protected in the short term. Also, the base rate of interest in the UK has been 1% or lower since February 2009, although experts predict the rate will rise back to 1% by the summer in a bid to curb the rising cost of living. This remains low by historical standards, with mortgages taken out since April 2014 stress-tested to a 6% interest rate.
Demand for rental property has also hit a record level. At +64, the net balance of contributors to the RICS survey reported an increase in January. Tenant demand is at its highest-ever recorded level, with Rightmove reporting renter demand is 17% higher than in January 2021, and up 33% compared to January 2020. Like the sales market, a shortage of property to let is underpinning prices, leading to rises in average rental values in all areas of the UK. However, according to a Property Academy survey, many landlords are keen to keep existing renters: 76% would maintain a rent level if they were happy with the existing renter.
¹ Resonance, 2022, Trip Advisor, 2021, Boston Consulting Group 2021, QS Best Student Cities, 2022