Market Review in Burton-on-Trent - November
Market Overview
Sales Prices
In September the UK HPI (ONS) reported a 4.7% annual increase in house prices. The South West had the largest annual increase (6.4%) and the North East had the smallest (3.3%).
Rightmove November Index reports a -0.5% monthly decrease in asking price but annual rate of change remains positive, +6.3%.
Savills expect a total of 20.4% growth over the next 5 years and JLL expect 19% growth. Zoopla expect house prices to increase by 1% in 2021.
Over the last 12 full months there have been 2,249 sales in Burton. This is a –27% change on the previous 12 month period. The average sales price was £181,822.
Rental Prices
According to ONS average rental values across the UK rose by 1.4% in the year to October. Northern Ireland and the East Midlands had the largest increase (2.4%) and Scotland had the smallest increase (0.8%).
RICS October survey reported +21% net balance of agents reporting an increase in tenant demand, the lowest reading since May 2020. New instructions to let a property decreased to -8%, a continuation of the pre-lockdown trend.
Economy
Covid-19 has caused the UK economy to shrink by 11% this year. Office for Budget Responsibility expect the economy to recover to pre-Covid levels by the end of 2022.
Support for public services, households and businesses cost £280bn this year, pushing the deficit to £394bn and debt above 100% of GDP. £20-30 billion in spending cuts or tax rises is required to balance revenues and day-to-day spending and stop debt from rising by the end of this Parliament.
The number of unemployment people is set to reach 2.6 million by the middle of next year, meaning the unemployment rate will hit 7.5%, the highest level since the financial crisis in 2009.
Transactions
105,630 transactions were recorded in October 2020, 8.1% higher than October 2019 and 9.8% higher than September 2020 (HMRC). Transactions so far in 2020 are -18.1% below the same period last year, non seasonally adjusted.
According to Rightmove sales agreed are up 50% on October 2019 and there are c.650,000 sales going through the buying and selling process, 67% more than at the same time in 2019
Owners of flats without cladding will no longer require a EWS1 form to sell or re-mortgage, clearing the way for nearly 450,000 flat owners. The government has also announced almost £700k to train more assessors, speeding up the processes where an EWS1 is required.
In Burton, 3% of sales in the past 12 months were flats, achieving an average sales price of £102,054 . Houses achieved an average price of £185,653. The total value of sales was £423,626,395.
The highest value recorded by the Land Registry over the past 12 months was £310,000 for a flat and £1,700,000 for a house.
Demand
In September 91,454 mortgages were approved, an annual increase of 39%, representing the backlog caused by lockdown and the surge in demand following the stamp duty holiday announcement. Gross mortgage lending was £20.5bn, an annual decrease of -7.6%, often lagging approval data.
The Dataloft Demand Index shows a +14% increase in housing market demand since the start of Lockdown 2, only -10% below the peak seen the week commencing 17th August.
RICS October survey reported a net balance of +46% of agents reporting an increase in buyer enquiries, +32% for new instructions and +41% for agreed sales. Although indicators remain positive, they are lower than last month
Investment & Lettings
According to ONS average rental values across the UK rose by 1.4% in the year to October. Northern Ireland and the East Midlands had the largest increase (2.4%) and Scotland had the smallest increase (0.8%).
RICS October survey reported +21% net balance of agents reporting an increase in tenant demand, the lowest reading since May 2020. New instructions to let a property decreased to -8%, a continuation of the pre-lockdown trend.
A net balance of +11% of agents expect rental growth over the next 3 months, down on last month and below pre-covid levels.
Development and New Build
New laws introduced to Parliament on 21st July will mean that unused properties can be demolished and rebuilt as homes while home owners will be able to build two storey extensions without the need for full planning permission. The plans aim to support the need for new housing while also providing a boost to town centres.
The housing market is set to remain high on the Governments agenda following the Prime Ministers announcement of Generation Buy.
The current Help to Buy scheme has been extended. Previously homes needed to have been built by December 2020, this has now been extended to February 2021. The deadline for the legal completion of sales remains the same, 31 March 2021. The new Help to Buy scheme, replacing the current scheme, will come into place from 1st April 2021 and run until March 2023 as planned.
Prime Markets
The biggest increase in sales agreed since the end of lockdown has been in the prime market, the number of properties sold subject to contract above £1 million was 100% higher than the same week in 2019 and properties priced between £750,000 to £1 million saw a 119% increase (Rightmove/Knight Frank).
The stamp duty holiday introduced until the end of March 2021 will create a great opportunity for investors, £15k will be saved on homes over £500k.
From April 2021 non-UK residents will face an additional 2% Stamp Duty Land Tax levy on residential property purchases in England and Northern Ireland. However the weakness of the pound will continue to drive demand.