July market snapshot
As the temperatures rise here in Bristol, the property market cools off ever so slightly, but from such high levels of interest, our sales and lettings offices certainly remain very busy. Let's start with a look at the headlines and then take a more in-depth look at this hot summer market.
The price of property coming to market hits a fifth consecutive record of £368,614, albeit by a modest 0.3% in the month (+£1,113), as the pace of price growth slows
Affordability constraints, a better balance between supply and demand, and usual seasonal price drops will contribute to further slowing of price growth in the coming months, with annual growth still on track to be 5% by the end of the year:
Buyer demand for each available property is down by 8% in May compared to April but remains 6% higher than last year, and more than double (+113%) the pre-pandemic five-year May average
In addition, there are signs of more fresh choices for buyers, with the number of properties coming onto the market for sale up by 7% compared to this time last year, but still below 2019 levels
Conveyancing log-jam means sellers need to come to market in the next few weeks to be in with the best chance of moving before Christmas, with the average time to get through conveyancing currently 150 days
More than 500,000 homes are currently sold subject to contract, which is 44% higher than in 2019
The Bank of England has raised the base rate of interest to 1.25%, its highest rate in 13 years. This represents the fifth consecutive increase since December as the Bank aims to control inflation which is anticipated to rise to 11% by October. Inflation, the rate at which prices rise, continues to edge upwards, rising to 9.1% in the year to May up from 9% in April (ONS). The rising price of food was a significant contributor to the rise in May, and fuel prices remain historically high.
Boris Johnson has resigned as Conservative Prime Minister, the stock market rose on the initial announcement but the FTSE 100 remains significantly lower in 2022 to date due to the wider global and domestic economic issues.
Transactions and demand
The latest available figures show over 109,000 sales took place in May, 12% higher than the pre-Covid average (2016-2020). To date in 2022 over 540,000 sales have taken place and market activity remains well above pre-Covid levels. Over 340,000 property sales were agreed in the first quarter of 2022 according to new data released by TwentyCi, volumes on track for 1.2 million transactions over the course of the year.
Properties are currently selling 20 days quicker than the long-term average (Rightmove), with a significant proportion selling above the initial asking price (Dataloft poll of subscribers). Needs-based buyers are the most active in the marketplace at the current time.
Just over 66,000 mortgages were approved in May, on par with the longer term pre-pandemic average in a sign that the market is beginning to re-set. At £28.4 billion mortgage lending was at its strongest in 2022 to date, no doubt as many sought to lock in deals prior to the base rate rise.
There are signs demand pressures are starting to ease.
While demand levels for the available property remain higher than last year, buyer demand per property available fell 8% compared to May according to Rightmove. However, they assert there are more than 500,000 homes currently SSTC, 44% higher than in 2019.
“The exceptional pace of the market is easing a little, as demand gradually softens and price rises begin to slow, which is very much to be expected given the many record-breaking numbers over the past two years. When we look at the number of buyers contacting estate agents compared to 2019 or the pre-pandemic five-year average, demand is still very high compared to what was once considered normal. We’re hearing from agents that though they might have had slightly fewer enquirers for each property in recent months, they’re still seeing significant interest from multiple buyers and are achieving successful sales. Entering the second half of the year, we anticipate some further slowdown in the pace of price rises, particularly given the worsening affordability challenges that people are facing. We expect this to bring the annual rate of price growth down from the current 9.7% towards the 5% increase that Rightmove predicted at the beginning of the year.” Tim Bannister, Rightmove’s Director of Property Science
A conveyancing log jam means that those who are looking to move this year and have yet to act will need to do so in the coming weeks. It is currently taking 150 days to complete a purchase on average after agreeing a sale, 50 days longer than at this time in 2019. This means that those who are hoping to complete a deal in time to enjoy next Christmas in a new home, need to come to market in the next few weeks to give themselves the best chance of finding a buyer and completing the transaction by the end of the year. There are more than 500,000 homes that are currently sold subject to contract, a massive figure which is 44% higher than it was at this time in 2019, and 39% higher than the pre-pandemic five-year average.
“Existing homeowners looking to buy again will still need to put themselves in the best possible position to secure their next home in this strong market by making sure they find a buyer for their current property before looking for their next home. This is all the more important for those hoping to complete the process as quickly as possible and enjoy Christmas in a new home this year. Though December may feel far away, the data shows the current conveyancing log-jam means it is taking an average of 50 days longer to complete a purchase after agreeing a sale than it did in 2019. It’s therefore important to act now and get in touch with a local estate agent to give yourself the best possible chance of being in your new home for Christmas.” Tim Bannister, Rightmove’s Director of Property Science
The average price of property coming to market hits yet another new record for a fifth consecutive month, rising by 0.3%. This is the smallest increase since January, as the pace of price rises starts to slow. Despite five consecutive interest rate rises and the increasing cost of living, buyer demand for each available property remains very strong, being more than double (+113%) the pre-pandemic five-year May average.
A10.7% annual property price growth across the UK moderated for the fourth month in succession in June according to the latest Nationwide house price index. At 0.1% month-on-month property price growth across the UK fell to just 0.1% in May, the lowest rate since December 2019 according to Zoopla. With mortgage rates rising buyers are likely to become more price sensitive as the year progresses. 12 month price expectations are moderating. A net balance of +37% of surveyors anticipates prices continuing to rise over the next 12 months. This compares to +78% in February (RICS)
Over the last 12 months, the average sales price in Bristol was £340,262. The total value of sales was £1,804,265,342.
Rightmove has revised its rental price forecast upwards. Average rents are likely to rise 8% over 2022, up from the previous forecast of 5%. Asking rents increased by 3.5% in Q2, as demand continues to outstrip supply. Average rents across Great Britain rose by 2.8% in the year to May, their highest rate of annual growth in nearly a decade. The latest figures released by the ONS, indicate rising rates of growth in all regions. Across the capital, rents are rising at their strongest rate in five years.
The common tenancy length is now over 2 years, with 18% of landlords saying their average length of tenancy has increased over the past year according to new research by Rightmove. Many renters are choosing to stay to avoid facing significant rent rises when moving.
Over the last 12 months, the average rent achieved for properties let in Bristol was £1,136 per month. This is a +9% change from the previous 12-month period. 68% of properties let in the past 12 months were flats, achieving an average rental value of £1,101 per month. Houses achieved an average rent of £1,235 per month. 69% of tenants are aged between 18 and 29.
Mon 18 Jul 2022