New research from Bloomberg Intelligence (BI) suggests that the UK housing market may avoid a crash, with housebuilders including Barratt, Taylor Wimpey, and Persimmon reporting stronger demand, despite a challenging outlook for 2023.
The study, part of BI’s Monthly Housing Pulse, also indicates that a thriving rental market has spurred robust demand from first-time buyers, despite issues of affordability.
The report highlights that minuscule asking-price discounts indicate resilience and a realistic approach from both buyers and sellers.
Iwona Hovenko, a real estate analyst at Bloomberg Intelligence, said: “The very narrow discounts of house prices agreed upon a purchase to those listed could imply a robust and resilient UK housing market, which might suggest a crash can be avoided in the absence of negative shocks.”
In March, sellers achieved 98.8% of their asking price, less than the 101% of a year earlier, but better than any March prior to 2021. Furthermore, homes listed and sold in March this year reached 99.9% of the asking price compared with 99% in the same month of 2019.
However, rising mortgage rates driven by sticky inflation and robust wage growth may pose a threat to the continuing recovery of the housing market. Yet, Hovenko remains positive, “Still, house-price resilience – as various indices point to prices falling by only 1-5% from the 2022 peak – is encouraging.”
The report also highlighted that fast-rising rents are motivating first-time buyers to purchase homes despite high interest rates. To manage smaller budgets, they are opting for smaller properties or extending the length of their mortgages.
London rents surged 17% annually in April to £2,200, while those outside the capital rose 8% and exceeded £1,000 for the first time, according to realtors Hamptons.
Additionally, due to affordability constraints, first-time buyers are increasingly turning to cheaper existing housing, especially after the end of the Help-to-Buy incentive for new builds. Hovenko added: “Barratt, Persimmon, and Taylor Wimpey all noted a drop in the number of sales to first-time buyers, despite their solid interest, contrasting several reports from Rightmove and Zoopla pointing to first-time buyers, surprisingly, being the most resilient of all buyer groups, driven by a hot rental market that has enabled rents to surge.”
