You may have seen October’s headline that property prices had fallen for the first time in 15 months. Should this come as a shock? No, as the frequency and rate at which house prices rose during late 2020 and 2021 was unsustainable.
The sales market experienced a one-off, extraordinary event during the Covid pandemic. Now that’s over, we’re entering a period of more ‘traditional’ trading conditions. Nationwide’s House Price Index from September gave us a hint of what was to come, with property prices remaining static.
Price corrections are coming
In October, Nationwide’s House Price Index revealed values had fallen by -0.9%, with experts predicting the start of prices returning to pre-pandemic figures. Values would, however, have to fall dramatically to reach pre-Covid levels. Even with a slight dip, October’s UK’s average house price is still £268,282. For reference, the UK’s average house price in January 2020 – just before the pandemic broke – was £215,897.
Buyers are still active
Another property report casts light on whether every aspect of property will go back to pre-pandemic levels. Propertymark’s latest data – released in October and reflecting activity in September – showed there was still healthy demand in the sales market.
It found 48% of its agents were reporting offers that were equal to or above the vendor’s asking price. Although this figure is lower than in previous months, it is more than double the pre-pandemic average of just 22%.
The number of new buyers registering with Propertymark’s members’ branches is also encouraging. This was 83 per branch in September (the same as in August) and up slightly since July. It is this continuing demand that led to Nationwide saying the UK’s property market could be in for a ‘soft landing’ instead of a bumpy post-pandemic crash.
While we are still monitoring the Bank of England’s interest rate decisions and how they impact the cost of borrowing, we were pleased to read that Zoopla had stuck its head above the financial parapet. The portal has forecast when mortgage rates may begin to fall from their current 6% highs. It expects reductions to come through in 2023, with a ‘new normal’ of around 4-5%.
This news should boost any flagging optimism among buyers, especially as the new Chancellor, Jeremy Hunt, decided to keep Kwasi Kwarteng’s revised stamp duty thresholds in place – changes that have resulted in zero or reduced stamp duty bills for many buyers.
Cheaper land tax bills in Wales
Stamp duty has also been in the news in Wales, with changes of its own. Referred to as Land Transaction Tax (LTT), the Welsh Government made its own changes on 10th October. Buyers of homes worth up to £225,000 now don’t pay any LLT tax at all.
People in Wales buying homes priced between £225,000 and £345,000 will also make a saving. Their LTT bill will be up to £1,575 cheaper. It’s only buyers of Wales’s most expensive homes who will pay more tax. If the purchase price is more than £345,000, buyers can expect their bill to be up to £550 more expensive.
Rents rise by another 1%
The rental market in the UK is treading its own path. Rents continue to rise on a yearly and monthly basis. In fact, HomeLet’s latest Rental Index detailed a 1% rise in October, leaving the UK’s new average monthly rent at £1,171.
Ever increasing rents are not deterring tenants, however. Further Propertymark data showed renters are still registering their interest in droves. An average of 147 applicants were registered with each branch of a Propertymark member in September – up from 141 in August.
If you would like to know more about your local property market, please get in touch.