The UK’s new Prime Minister has hit the ground running, with fiscal support for households and businesses to tackle the energy crisis announced within days. The housing market remains busier than during pre-pandemic times, but with concerns over the UK economy, it is likely to recalibrate in the months ahead.
Liz Truss becomes the UK’s third female Prime Minister and the fourth person to hold this title in just over six years. Building more homes faster was specifically, if fleetingly, mentioned in her first speech as prime minister.
According to national statistics, the average price of a property in the West Midlands is close to £45,000 more expensive than in summer 2020, after the COVID-19 market lockdown. During the same period, the threshold for a prime market property in this region has risen by £78,000. Annual price growth in the region’s prime markets has moderated in recent months. Lichfield, Hereford and Worcester are currently the best performing markets in the West Midlands.
Except for the stamp duty holiday-fuelled market of 2021, the first half of 2022 proved the busiest since 2016, with over 100,000 homes changing hands each month (HMRC). This activity pushed revenue from property taxation over the period to more than £5.5bn, a record high (HMRC, Welsh Revenue Authority). However, sales volumes are predicted to moderate in future months as the economic headwinds tighten. Buyer demand for property remains above the pre-pandemic market of 2019, some 20% higher in August (Rightmove), but this has eased back from the start of the year. Mortgage approvals, a forerunner of future demand, have also fallen below their pre-pandemic monthly averages (Dataloft, Bank of England). While over two-thirds of outstanding mortgage balances are on fixed-rate deals, currently unaffected by Bank Rate rises, mortgage interest rates are rising for those currently in the market. For those with a 25% deposit, 2, 3 and 5-year rates are all now in the region of 3.5%; rates for those requiring a mortgage at 90% Loan-to-Value are marginally higher¹.
The Prime Minister has announced a series of measures aimed at tackling the energy crisis. Energy bills will be frozen at £2,500 annually for a typical household until 2024, while bills for businesses will be capped for an initial six-month period. Such fiscal support is expected to curb inflation by up to 5%, but could well impact future interest rates. Whether these measures result in an uptick in consumer confidence, currently lower than during the global pandemic, or are enough to stop the UK entering recession during the final quarter of 2022, remains to be seen. The new Chancellor of the Exchequer, Kwasi Kwarteng, is expected to deliver a fiscal statement early in the autumn, with announcements about the Bank Rate expected during future Monetary Policy Committee meetings.
Properties are selling (sold subject to contract) in four to five weeks of being listed on the market. However, Rightmove report it is currently taking 136 days (4.5 months) to complete a sale, with conveyancing delays a significant factor. Back in 2019 a survey of home movers found that more than half of sales completed within three months; this proportion has subsequently fallen each year. With over 80% of purchasers expecting to complete their move within three months², managing expectations is crucial. For buyers currently in the market, the start of 2023 is less than 4 months away.
¹Bank of England, rates as at 31.07.22 ²Dataloft, Property Academy, OnTheMarket
£477,000 £669,773 1 8% £351
£550,000 £739,945 +1.3% £374
£475,000 £616,411 +7.8% £318
£729,000 £1,022,322 +6.2% £481
£974,000 £1,414,781 +8 5% £580
£375,000 £522,064 3.4% £275 £463,000 £638,823 2.7% £331 £495,000 £662,601 0.9% £320
£798,000 £1,102,110 +5.5% £531 £1,670,000 £2,718,070 +14 7% £1,251
£324,000 £425,988 5% £264 £625,000 £798,785 +9% £367
£384,000 £486,477 3% £306 £444,000 £578,636 8% £310 £549,000 £756,141 5% £383 £669,000 £831,470 +7% £354
£640,000 £844,658 +17% £390
£487,000 £631,816 1% £358
The premium price threshold is the value over which the top 5% of property sales occur. The chart shows a rolling 12 month change in the average price paid for premium properties compared to the previous 12 month.
An individual premium price threshold is calculated for each property type based on sold prices in the last 12 months. The chart shows the average price paid per square foot for all of these premium properties.
NOTE:
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price paid per square
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