Despite a difficult economic backdrop, the UK property market is proving its resilience as sales agreed and new instructions increased in the three months to June.
Almost 70% of all properties listed so far in 2023 have sold, according to the latest Property & Homemover Report for Q2 2023 by TwentyCi, in what is described as a “remarkably resilient” market.
The research found that the number of sales agreed across the UK property market rose by 14.5% between the first quarter and the second quarter of this year, from 266,332 to 304,946. Even with the ongoing stubborn inflation the country is experiencing, alongside stretched budgets, the figures suggest appetite remains.
What’s more, new instructions (homes being put up for sale) also increased by 10.6% between Q1 and Q2, from 402,334 to 445,160. Asking prices are also still well above pre-pandemic levels, and are now up by 6% on Q1’s figures, bringing the average to £447,000, says TwentyCi.
As the report notes, the volumes of new listings we are seeing currently are reflective of a ‘normal’ market pre-2020-2022.
However, the number of exchanges has fallen by -12.5% since Q1, which the report outs down to “the lower levels of transactions flowing through from sales agreed in Q4 2022 and Q1 2023”. It also notes that the average time to exchange on a property is now down to 115, lower than 2022’s figures.
Is there still a UK property shortage?
The availability of residential sale stock has recovered “in all price brackets compared to a year ago”, says the report. However, it is important to hone in on the details, which shows wide variations in terms of which property types are the most affected by supply shortages.
TwentyCi’s report points out that buyers seeking UK property in the higher price brackets (£350,000 upwards) have more choice now than they did before Covid. For those looking in the £1m+ bracket, the choice is “significantly” more – availability has risen by 45% since the pandemic.
However, the issue with UK property supply falls more at the lower end of the scale in terms of pricing. Buyers seeking properties priced at less than £200,000 will find 36% fewer properties to choose from now compared with 2019, partly because average house prices have increased significantly since then.
Performance by location
Six UK regions across the UK property market saw asking prices increase between the first and second quarter of this year, while seven areas saw declines, according to the report, showing a relatively balanced market.
The biggest “post-pandemic gains” in the UK property market were in Inner and Outer London. These areas have been among the slowest in the UK to see price rises over recent years, having been outpaced by regions further afield. Inner London recorded asking price gains of 6.4% for Q2, while Outer London followed with 2.4%.
The other locations with increases in their asking prices were Northern Ireland (1%), the north east (0.7%), Yorkshire & the Humber (0.4%) and the north west (0.1%).
Meanwhile, the regions experiencing asking price dips were the south east (-0.7%), south west (-0.7%), Scotland (-1.0%), East Midlands (-1.9%), West Midlands (-2.3%), east of England (-3.1%) and Wales (-3.5%).
Keep an eye on inflation
This week, the Office for National Statistics (ONS) revealed that inflation had fallen more than many had expected in the year to June, down to 7.9%. This comes after last month’s news that inflation had not come down at the predicted rate, which was disappointing for many.
The current Bank of England interest rate is 5%, after 13 consecutive rises from its low point of 0.1% since last year, and the latest news has led many to speculate that the Bank may not increase the rate in August by as much as had been previously expected.
As Colin Bradshaw, CEO of TwentyCi, points out, it is important to be aware of the economic headwinds but overall the UK property market is proving robust.
“There has been no shortage of attention-grabbing headlines declaring doom for the housing market of late,” he says. “The economic backdrop does remain a concern and all eyes should be on whether inflation slows and so interest rates stabilise.
“But the signs are that the market is proving remarkably resilient. To borrow a phrase from Mark Twain, reports of the market’s demise may well be greatly exaggerated, at least as far as the owner-occupied market is concerned.”