Your monthly UK housing market update – with sold and asking prices, RICS market sentiment and the outlook for the year ahead.
HM Land Registry – Sold Prices
UK house prices rose by 7.8% in the year to June 2022. On a non-seasonally adjusted basis, this is an increase of just 1% between May and June – significantly down on the 5.7% rise seen last year.
Sold Prices in the East of England saw the largest growth of 9.7%. Whereas London lagged behind the pack for most of the year, price growth was slowest in the North East over June. Here, house prices rose by just 3.6%.
Explaining this slowing growth, the Bank of England reported slightly more properties available for sale, with inflation starting to ease in some areas.
Sales were also down, with estimated transactions on residential properties sitting at 95,420 over June (54.3% lower than the previous year). This also shows a decrease of almost 8% between May and June 2022. Signalling a further slowing of the market, mortgage approvals were also down by 3,000 on the pre-pandemic 12 month average.
Rightmove – Asking Prices
Rightmove report average asking prices dropped by 1.3% over August 2022. As a fall of -£4,4795 (to £365,173), this is on a par with the average price drop over the summer holidays.
With many buyers pausing plans until autumn (especially in higher priced brackets), competition is lessening slightly. Equally, homeowners wanting to beat the average 136 days to complete and move before Christmas are pricing attractively.
In addition to the summer lull, the sixth consecutive interest rise (up from 0.5% to 1.75%) is dampening affordability. Combined with ever-rising costs of living, many buyers are reassessing their monthly outgoings.
Nonetheless, there is still a massive imbalance in supply and demand. Whilst new listings are 6% down on 2019, buyer demand is 20% higher.
Faced with overall rising prices and interest rates, first-time buyers with 10% deposits are now facing average monthly mortgage repayments over £1,000. This is a hefty 27% higher than the beginning of the year.
RICS – Chartered Surveyor Sentiment Survey
The RICS UK Residential Market Survey reports new buyer enquiries and agreed sales both declined over July 2022 (with a net balance of -25% and -13% respectively). As the third successive month in negative territory, it’s the longest stretch of falling demand since the start of the pandemic.
Respondents cite higher interest rates and worsening economic headwinds as responsible for this softening momentum. As a result, sales expectations have fallen to -36% at the twelve month horizon (down from -21% last month).
Nevertheless, as new instructions remained roughly stagnant (at -5%) with average stock levels close to all-time lows (at just 36 per estate agent branch) – this limited supply continues to underpin prices.
In fact, prices rose across all areas of the UK, with +63% of respondents reporting increases. Reflecting economic concerns though, price expectations for the year ahead dropped to +30%, down from a high of +78% in February 2022.
Zoopla – Housing Market Outlook
In Zoopla’s latest House Price Index, they expect slower rates of price growth for the second half of 2022, as economic pressures hit more and more households. Nonetheless, Zoopla note the market is in a relatively good position to weather any economic storms.
They believe mortgage affordability testing (where buyers prove they can afford 6.5-7% mortgage rates, despite paying 2%) has created a certain level of market resilience, limiting rapid drops in prices and sales volumes. If mortgage rates peak at 4% as expected, Zoopla don’t forecast widespread falls in house prices.
Zoopla do predict squeezes on incomes and living standards will modestly influence market activity and price growth well into 2023 though. If mortgage rates also move over the 4% threshold, this is likely to have more severe effects.
Express Index
For a full, comprehensive breakdown of current property market activity. Visit our Express Index here
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