Despite further rises in interest rates and cost of living concerns, the market continues to transact. Demand is improving, with a continued growth in the number of new sales agreed and stock levels on the rise. Consumer confidence is improving, and the UK economy is now expected to avoid recession.
An increase in sales volumes and an 18% uptick in mortgage approvals since February (Bank of England), along with improving stock levels and consumer confidence on the rise, are positive signs for the economy. Agreed sales volumes are now just 1% below March 2019, the first time the monthly volume of sales agreed has been back to its pre-pandemic level since September 2022 (Rightmove). Buyer demand has fallen slightly from March to April, with the net balance of respondents dropping from -30 to -37% (RICS), although this is still an improvement on the lows at the end of last year. The stock of homes for sale continues to grow and is now 66% higher than a year ago (Zoopla). Despite this, pressing cost of living concerns and the higher inflationary environment have resulted in buyers considering their budgets carefully. After the race for space inspired by the pandemic, value-for-money properties including apartments and smaller properties have become more of a priority, particularly for those needing a mortgage. The mortgage sector appears to be weathering current volatility, with 79% of brokers saying they were “confident” about the outlook for the mortgage industry in Q1 2023, compared to 65% in the previous quarter (IMLA).
The UK economy is now forecast to return to its pre-pandemic size by the end of 2023 (Bank of England). However, new house building activity continues to be impacted by the rising cost of materials and borrowing.
27,763 new homes were registered to be built in Q1 2023, down 40% from the same period last year, while completions
fell less steeply by 7%. In the South West, regional registrations are down by 32%, a shallower drop than the national average (NHBC).
Although construction output rose for the third consecutive month in April, according to the latest PMI release by S&P Global, new residential housebuilding remains constrained. Energy efficiency also remains a pressing issue, with 79% of home movers citing energy efficiency as important (Dataloft, Property Academy), people may be moving out of older homes to more energy-efficient new builds. 40% of respondents to the most recent RICS Residential Market Survey state they are seeing more interest from buyers in homes that are energy efficient, and 61% say energy-efficient homes were holding their value in current market conditions.
Property price growth in the mass market has slowed, although Nationwide recorded the first uptick in UK house prices of 0.5% in April, after falling for seven consecutive months. The average asking price in the South West is £387,415, up 2.0% from the same time last year (Rightmove).
Top end sales have held up, with the proportion of sales over £1 million slightly higher than last year, increasing from 2.7% to 3.4% in the year to April (Dataloft, Land Registry). Higher borrowing rates have placed cash buyers in a comparatively strong position. In the South West, the prime markets of Bournemouth and Bath are currently the best performing.
DETACHED SEMI-DETACHED TERRACED FLAT/APARTMENT ALL PROPERTY
DETACHED SEMI-DETACHED TERRACED FLAT/APARTMENT ALL PROPERTY
