Despite the headwinds of rising borrowing costs, the UK property market remains resilient, according to Home.co.uk’s Asking Price Index for August. Notably, indicators like marketing times and stock levels are significantly lower than in the pre-Covid years of 2018 and 2019.
Following the price drop in December 2022, the current pricing is consistent, with no significant hike in property markdowns. The mix-adjusted national average did experience a drop when compared to August 2022, but this downturn follows the peak of the extraordinary COVID-induced buying frenzy.
Though mortgage rate hikes seem to dampen the market sentiment, present observations still align with the typical seasonal cycles. This points to prices and stock levels peaking during summer. However, should unsold stock numbers increase later in the year, it might signal a shift from scarcity to surplus. Considering the intense demand and scarce supply in the rental sector, this shift seems improbable at the moment.
The Bank of England’s recent decision to increase the base rate by 0.25% to 5.25% has been met with criticism. Questions arise about the necessity of such a hike, especially when the Bank itself expects inflation to decline independently. Such decisions carry the risk of adversely impacting the UK property market.
Despite the Bank’s contentious move, UK property owners remain steadfast. No drastic increase in sales listings is evident, nor is there a rush among vendors to slash prices.
While stock levels have rebounded from their record lows, it signals the market’s return to regular conditions after the boom. Future stock levels are expected to determine the market’s direction. As of now, with the rental market experiencing incessant demand, the possibility of a true buyer’s market is slim.
Last month’s pricing data shows steady performance in specific regions. The North West and Yorkshire reported slight increases, with Scotland adding a notable 0.9% to the mix-adjusted average. The pricing in Wales remained unchanged. Northern regions, including Scotland and Wales, have shown persistent momentum, with prices holding strong due to constant demand.
Rental prices, on the other hand, are soaring across English regions, Scotland, and Wales. The UK’s mix-adjusted average annualised rise is at 11.9%. Particularly alarming is the East Midlands, where rent inflation is at a staggering 17.8%. Factors like mandatory licensing schemes, energy upgrades, and increasing mortgage rates are likely to burden tenants further, as landlords may exit the market or raise rents to accommodate rising expenses.
To provide perspective, the annualised mix-adjusted average asking price growth across England and Wales has dropped to -1.8%. Comparatively, in August 2022, the home price annualised rate of increase was at a positive 5.2%.
