COULD THE SPECULATION ABOUT THE PROPERTY MARKET DECLINE BE OVERSTATED?

Thursday August 10, 2023

The UK housing market is displaying robustness amidst economic challenges. Despite the hurdles presented by increasing mortgage rates and inflation, the market’s performance remains commendable considering the prevailing economic circumstances.

Data for July 2023 demonstrates that “new instructions” have hit their highest point in the last four years, experiencing a 4.5% uptick compared to the previous year, totaling around 986,000. Simultaneously, there have been approximately 659,000 “sales agreed.”

Though overall demand has tapered compared to the preceding year, it’s important to contextualize this against the extraordinary market dynamics of 2022.

Inventory levels have exhibited enhancement across all price ranges, particularly among properties priced at £350,000 and above.

Within the price range of £200,000 to £350,000, the supply of available properties has surged by over 50% compared to the prior year.

Nevertheless, shortages persist below the £350,000 range and are compounded by a deficiency of new homes under construction. A reported backlog of 4.3 million unbuilt homes in the UK underscores this shortage.

Compared to the more typical market of 2019, most regions have observed a reduction in stock levels, with exceptions found in the East and West Midlands, along with Inner London. Notably, Inner London boasts over 17% more properties available compared to 2019.

Encouragingly, the gap between initial asking prices and exchanged prices remains consistent with pre-pandemic levels in 2023. Average asking prices at the time of listing have risen by 2.8% over the past year and by 24% since 2019. Correspondingly, exchanged prices reflect comparable growth, having risen by 3.8% over the past year and by 22% since 2019.

The number of transactions that have fallen through has decreased since the mini-Budget, and transaction prices have stabilized. “Sales agreed” were higher in the second quarter compared to the first quarter.

The average time it takes to sell a property is currently around 61 days, indicating an increase from the previous year but a reduction of 18% from the 75 days observed in 2019.

For properties priced at £200,000 or less, the average time to sell is 55 days. Scotland presently boasts the fastest selling time at 45 days, while Inner London experiences the longest selling time at 83 days.

Regarding these trends, industry experts noted:

“The sustained demand from buyers, despite economic challenges such as rising interest rates and inflation, coupled with determined sellers, underscores the market’s resilience. Although transaction levels are slightly lower than the exceptional activity seen last year, it’s essential to recognize that 2022 was an anomaly.

“Despite ongoing uncertainty around mortgage rates and inflation, the market’s performance remains robust. While a shortage of lower-priced properties persists, enhancements are evident across all price brackets, particularly properties above £350,000.

“Asking prices continue to rise, and transaction prices remain steady. These indicators underscore the market’s resilience and suggest that concerns about a significant market decline might have been overstated.”