What does it take to stop the UK’s apparently unassailable property market? Another interest rate rise? An energy crisis? Rising food bills? For now, apparently none of these factors is denting the determination to move home.
In August, the UK’s average house price inched upwards again, rising from £271,209 in July to £273,751 in August. This was just one statistic that characterised high summer. Here are some additional things we learned about the sales and lettings marketing in August.
Monthly v. yearly house price growth
The Nationwide’s August House Price Index is a good barometer of the market as we head into autumn. When looking at yearly fluctuations, the rate at which house prices are increasing is starting to slow. It was 11% in July but has dropped back to 10% in August.
August’s surprising house price rise
There was, however, an anomaly in month-on-month house prices. After two months during which the rate of house price growth slowed, August brought a reversal of fortunes. House prices increased by 0.8% in the month – a figure that defied expectations. To put this into context, house prices increased by 0.3% in June and by just 0.1% in July.
With the energy price cap rising again on 1st October 2022, homeowners are looking to improve eco efficiency. The extent of this desire has been uncovered by a new Halifax survey. The results, released in August, showed that over a fifth of people taking out loans and additional borrowing on a mortgage (known as a ‘further advance’) are doing so to improve energy efficiency in the home.
The Halifax survey also uncovered what currently puts people off buying a property. A whopping 70% of respondents said structural problems, including cracks, subsidence or major damp and mould, would prevent them purchasing. What buyers wanted most was a large, modern, detached home with a kitchen/diner and walk-in wardrobe. This constituted a ‘dream home’ for 34% of potential buyers.
Other ‘must haves’ that would sway purchasers included a good internet connection and energy efficiency. Open plan living and a study were also cited as important features, as was real grass. In fact, almost half of those questioned said they found an artificial lawn off-putting.
A Rightmove report released in August provided a fascinating snapshot of the lettings market. It found tenants have expanded their geographical catchment in search of the perfect property. In July 2018, the average search area was 70km2. Today that has almost doubled to 137km2.
Tenants need to increase their rental budget
While one of the key reasons this catchment has widened is a new-found ability to work from home, decreasing the need to live close to a business district, there is another reason behind this trend. Many tenants are having to search further and wider to find affordability. We only need to look at the latest analysis from HomeLet to discover why.
Its tracking of the UK’s average rent shows values have increased month-on-month. During August, a new tenancy set renters back £1,143 per calendar month – up 1.4% from July. When evaluating rental values on a year-on-year basis, it’s 8.5% more expensive to rent in 2022 than it was in 2021.
House price and rental predictions
Modest monthly house price rises are predicted for the rest of 2022. As a good gauge, Zoopla forecasts property values to increase a further 5% by the end of the year. The rental market, however, may set its own pace.
Rightmove thinks rents will end this year 8% higher than 2021 due to the basic rule of supply and demand. Its research shows the total number of properties available to rent remains 25% behind August 2021. With record rents and a rising energy cap, it’s no surprise that Rightmove has confirmed that ‘bills included’ has become the most popular renter search term.
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