Autumn 2023 Market Report: Remarkable Resilience
Posted on: Monday, September 11, 2023
Despite challenging economic conditions, the market remains resilient, in part due to motivated buyers still looking for correctly priced homes. Activity amongst fi rst-time buyers is holding up well.
July and August are typically slow months for selling properties. Summer holidays, outdoor activities and children off school mean that our thoughts are elsewhere. In August we have historically seen an average month-onmonth fall of 0.9% (Rightmove). This year the fi gure is higher at 1.9%, an indication of growing realism in the market and keen vendors pricing competitively to attract buyers. Despite the current softening in prices, average house prices in May were down just 2% on last September’s high and still over 20% above pre-pandemic levels (Zoopla).
In light of improving infl ation data and more positive forecasts for the UK economy, lenders have been cutting their fi xed mortgage rates. The quarterly growth rate of mortgages approved has improved from the start of the year, with lending volumes 6.3% higher over the three months to the end of July than they were for the prior three months. Whilst current levels are higher than at the end of 2022 and early 2023, they are considerably lower than a year ago (Bank of England).
Demand continues to be supported by strong employment levels and record annual wage growth. Those serious about moving are still doing so, perhaps adjusting their budget to offset interest rate increases. The number of sales agreed is currently 15% lower than 2019 levels. However, the fi rst-time buyer sector is holding up better, down by 10% and likely
driven in part by high rents and lack of rental availability (Rightmove). Despite the economic conditions, transaction numbers have also been relatively resilient. There were 86,500 transactions in July on a seasonally adjusted basis, a modest 0.8% higher than in June, although down 16.3% on July 2022 (HMRC).
Rental growth continues to rise. The average UK rent in August was £1,261, up 10.3% year-on year and 1.4% from last month (HomeLet). Demand is high, with void periods plunging to just nine days in July, down from 16 days in June (Goodlord). Renters are looking to remain in their properties longer, with the average length for an initial rental contract in Q2 at 12.7 months, up from 10.5 in the second quarter of 2019 (Dataloft Rental Market Analytics).
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