Housing Market Update September
The end of the stamp duty holiday, demand from buyers and tenants, house price growth - we take a look at the Burton and Derby Housing Market through September and predict what might happen in the coming months.
Economy
The UK economy grew by 0.1% in July, its sixth consecutive month of growth although growth slowed significantly from the 1% recorded in June. Output in the service sector remained broadly unchanged, the construction sector contracting by 1.6%.
The number of job vacancies in the UK has risen above 1 million for the first time since records began in 2001. There were 1.03 million vacancies recorded in the three months to August.
The ONS also report employee numbers are now back to pre-Covid levels.
The ONS report inflation rose to 3.2% in August, price rises recording a record jump. The rise is expected to be temporary and is partly the result of food costs soaring compared to a year ago when the Eat Out to Help Out Scheme was in place and many diners received a 50% discount on meals out.
Prices
The rate of annual price growth across the UK slowed in July in all regions except Scotland. Month-on month across the UK the average price of a property fell by by 3.7%. At £255,535 the average price of a property is 8% higher than a year ago (UKHPI).
Overall, asking prices have fallen by -0.3% this month, this is the first price drop recorded in 2021. The upper end of the market saw the decline in asking prices, whereas first-time buyers and second steppers increased (Rightmove).
A net balance of agents (+66) sense prices will rise over the next 12 months according to the August sentiment survey released by the Royal Institute of Chartered Surveyors. Measures tracking new instructions have fallen for the fifth consecutive month.
Transactions
Over 1 million property transactions have taken place across the UK in the first eight months of 2021, higher than the number of sales during the entire year last year. The HMRC estimate 98,300 sales took place in August as the final SDLT reduction draws to an end.
According to Rightmove this was the busiest first half of a year ever. There were 140,000 more sales agreed in the first half of the year and 85,000 fewer new listings than the long-term average. This imbalance created a 250,000 shortfall of homes for sale.
At 36 days, the time taken to sell a property (from marketing to SSTC) is 29 days shorter than at the start of 2021 (Rightmove). Properties are currently selling the quickest across the South West (32 days) and those in London taking 55 days.
Demand
Although mortgage approvals in August were 15% lower than a year ago, at 74,453 they were 10.5% higher than the longer term (2015-2019) August average. At £21.5 billion, gross mortgage lending in August was 11% higher year-on-year (Bank of England).
According to Rightmove buyer demand in the first week of August was up 56% compared to the same period in 2019 and down just 17% on the busy post lockdown period.
The August RICS sentiment survey results point to a slight softening of market activity. New buyer enquiries, and agreed sales have fallen for a second consecutive month .Survey participants foresee a steady market over the next three months.
Investment/lettings
Rental values are rising at their strongest pace in three years. Average values across the UK, excluding London, rose by 2.0% in the year to August (ONS). Rental values across the capital continue to buck the trend, 0.4% lower year-on -year.
At +66% the new balance of respondents noting a rise in renter demand across England and Wales is at its highest level ever recorded by the RICS monthly survey.
As with demand the net balance of agents in the RICS survey envisaging rental growth over the next 12 months is at its highest ever recorded level. The net balance of agents predicting a rise was higher in all regions except the North and Scotland.
Development/new build
Michael Gove has been appointed Secretary of State for Housing, Communities and Local Government following a cabinet reshuffle. His new remit will include taking on "cross-Government responsibility for levelling up" as while as retaining responsibility for the Union and elections.
During the first three months of 2021 over 37,000 private new homes were started and over 36,000 completed. The figures, released by the Ministry of Housing, Communities and Local Government represent the strongest start to a year for private new build activity since 2007.
Media reports suggest the government is planning to give Councils the power to veto new homes being sold as second homes and holiday properties. Planning consent may well be required before properties are used as holiday lets and developers may be obliged to provide more starter homes on any new developments.
Prime markets
Over 2.5% of all property sales over the past year have been priced £1 million or above according to data from the Land Registry. Price growth in prime rural and coastal areas has outpaced that of the capital over the past year, but latest data suggests the prime market here has now bottomed out.
LonRes report new instructions to the market across prime central, prime London and prime fringe areas were up 6% in July on the five-year (2015-2019) average, while the number of properties placed under offer was down just 1%.
Compared to a supply shortage across much of the UK, the number of available properties to purchase across Prime London was 20% higher year-on-year in June. With markets well supplied, there is little scope for price growth, many prime areas awaiting the return of overseas buyers to bolster demand.
Outlook
The end of Stamp Duty saw little impact on the demand from buyers. The 'search for space' and lifestyle changes following Lockdown is still impacting the market and will continue for several months.
Wider factors effecting the economy, ending of government support including furlough and more challenging economic factors like the Energy Crisis will have an impact on the housing market as we move through the remaining months of 2021 and into 2022.
We don't expect much to change in the coming months with a balance to stock levels start to rebuild in Q1/Q2 2022.
If you would like to discuss the market or have plans to move, get in touch with us using the form below.
