June market snapshot

Despite the undoubted strains on incomes and an uncertain outlook overall, Bristol continues to outpace a still very busy UK property Market. All of our offices continue to receive extremely high levels of interest across all property types and whilst demand certainly outstrips supply, we are receiving a high level of enquiries to sell currently.

Whilst it is understandable some may wish to hold off and take a pause on moving plans for now, if a home move is required in 2022 then as you will read below, it's currently taking on average 150 days to complete a purchase after agreeing a sale. That's 50 days longer than at this time in 2019, so, do feel free to get in touch with your local Ocean office with any questions on upsizing, downsizing, moving in, out or, maybe not moving at all! but adding value to your current property whilst you stay put. We're here to help.

Headlines

• The price of property coming to market hits a fifth consecutive record of £368,614, albeit only up 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 choice 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

Economy

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, fuel prices too remain historically high.

The UK economy shrank by 0.3% in April, following a 0.1% in March according to the latest data from the OND. Forecasts for the UK economy for 2022 and 2023 have been downgraded in recent weeks as households and businesses grapple with rising prices.

However; Bristol has seen a 13% average house price growth in 2021 and as we know, prices continue to rise above the UK average. Our city has one of the fastest growing economies in Europe, seeing huge investment across many sectors. Bristol benefits from large multi-national employers in the financial and technology sectors as well as Media and Medical. Whilst we continue to support (and be proud of) our local independent businesses small and large, recent start-ups and the many entrepreneurs creating opportunities and income for the Bristol economy. 

Demand

The Bank of England report a drop in mortgage approvals in April. 65,974 mortgages were approved, down 23% year-on-year and slightly below the 2015-2019 pre-pandemic average. 

Of the £76.9 billion advanced for owner-occupier house purchases, just 58% was for new commitments, the lowest proportion since the market re-opened in June 2020. 36% of commitments were for re-mortgage activity (Bank of England). The Prime Minister has announced an independent review of access to mortgage finance in a bid to boost first-time buyers and ensure those who wish to buy are able to access mortgage finance.

Conversely, 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). 

“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

Prices

The average price of property coming to market hits yet another new record for a fifth consecutive month, rising by 0.3% (+£1,113) to £368,614. 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.

However, Rightmove says 'we are seeing signs that this is continuing to ease, with this measure down by 8% in May compared to April. After a very strong first half of the year, it is likely that affordability constraints will have a greater influence on market behaviour in the months ahead, with further interest rate rises anticipated. This, alongside more choice coming onto the market for buyers and the usual seasonal variations we’d expect, means that there are likely to be some month-on-month price falls during the second half of the year. We expect this to bring house price growth by the end of the year to around the 5% we originally predicted in December'

Property and rental prices are expected to climb across most of the UK over the next three months, based on the latest RICS sentiment survey of Chartered Surveyors. Surveyors are more optimistic about the short-term outlook for rents, with +58 expecting rental values to increase over the next few months, compared to +21 for house prices.

Both markets are blighted by stock shortages. The rental market is suffering from falling landlord instructions at a time when demand from renters is increasing, possibly due to a lack of stock in the sales market.

The 12-month outlook is starting to ease slightly for house prices but remains positive. The rate of growth in rents is expected to overtake that of house prices over the next five years. Source: Dataloft, RICS (net balance score is calculated by the proportion of survey respondents reporting a rise minus those reporting a fall in the given indicator)

Outlook

Buyers are currently being welcomed with more fresh choice, with the number of properties coming onto the market up by 7% compared to this time last year. However, this measure remains down by 11% when compared to the same time in 2019.

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

Wed 22 Jun 2022