October market snapshot
For Ocean estate agents to say we have continued to be extremely busy would a. be an understatement b. not be particularly revealing, our reporting this year has if nothing else, conveyed Bristol's property market has been, well extremely busy!
So let's look at what figures are currently available to add some context to your local property market as we embrace the shorter days, colder weather and particularly early Christmas advertising.
In the Autumn Budget, the Chancellor described the economic picture as “strong” in the short term, with the Office for Budget Responsibility expecting the economy to return to pre-pandemic levels 6 months earlier than expected (by 2022). Unemployment is expected to peak at 5.2% next year, lower than 11.9% previously predicted by the OBR. Wages have grown in real terms by 3.4% since February 2020. Inflation in September was 3.1% and is likely to rise to an average of 4% over next year (OBR). The Bank of England has maintained interest rates at 0.1%, a rise in December is likely.
Russell Galley, managing director at Halifax, said: “The performance of the economy continues to provide a benign backdrop to housing market activity. The labour market has outperformed expectations through to the end of furlough, with the number of vacancies high and rising relative to the numbers of unemployed.
The average price of a property is £25,000 more expensive than a year ago. The ONS report annual price growth across the UK was 10.6% in August, up from 8.5% in July, the average price of a property now £264,244. The price of property coming to market has surged past last month’s record and jumped by an average of 1.8% (+£5,983) this month. This is the highest percentage monthly rise at this time of year since October 2015. In addition, this is the first time since March 2007 that Rightmove has recorded a ‘full house’, with all market sectors and all regions of Great Britain having hit new record price highs in the same month. The continued fast turnover of property for sale and a window of opportunity to buy before a potential interest rate rise seems to have overcome the final expiry of all stamp duty incentives and are keeping activity robust.
Tim Bannister, Rightmove’s Director of Property Data comments: “Competition for property for sale remains hot this autumn, with average prices jumping by almost £6,000 in the month. Although more properties are coming to market, the level is still not enough to replenish the stock that’s being snapped up. Consequently, new price records have been set across the board, with every region of Great Britain and all of the three market sectors of first-time buyer, second-stepper and top of the ladder hitting all-time highs. This ‘full house’ is an extremely rare event, happening for the first time since March 2007. The stock shortages started after the first lockdown, and they look set to continue with the underlying housing market fundamentals remaining strong, and an additional incentive to buy and fix your mortgage interest rate before a widely expected rate rise. Mortgage interest rates are lower than they have ever been before and lenders are keen to lend in a competitive market, with employment and wage growth also robust. The number of sales agreed continue to be strong despite the end of the stamp duty incentives.”
The average UK property price hit a record high of £270,027 in October, up 0.9% month-on-month, according to the latest Halifax House Price Index.
Annual house price inflation now stands at 8.1%, up from 7.4% a month earlier. Russell Galley, managing director at Halifax, said: “UK house prices climbed again in October, as the value of the average property grew by 0.9%, an increase of more than £2,500 during the month. With prices rising for a fourth straight month, the annual rate of inflation now sits at 8.1%, its highest level since June.” Gallery explained that one of the key drivers of activity in the housing market over the past 18 months has been the race for space, with buyers seeking larger properties, often further from urban centres. Combined with temporary measures such as the cut to stamp duty, this has helped to drive up the average property price. Since April 2020, the first full month of lockdown, the value of the average property has soared by £31,516 – up 13.2%. First-time buyers, supported by parental deposits, improved mortgage access and low borrowing costs, have also helped to drive price growth in recent months.
Zoopla’s estimates show that there will be 1.5 million sales this year, with the total value of homes changing hands at £473bn, some £95bn higher than in 2020. The trends driving the market have been well discussed – a ‘reassessment of home’ prompted by the pandemic, a ‘search for space’, low mortgage rates, better access to mortgages for first-time buyers, and, of course, the stamp duty holiday. The passing of the final stamp duty holiday deadline on September 30th in England means there are no more purchase tax savings on offer across the UK. The resulting impact on demand gives us the first indication of what will happen in the market next year.
So what has the impact been over the last two months? Minimal. That’s not to say that buyer demand remains at the unsustainable highs seen back in March and April, but it remains steadily above the five-year average, some 28% higher, suggesting those pandemic drivers of activity in the market remain in play. The primary factors will be an ongoing re-evaluation of housing needs, and a move to more hybrid working in some offices up and down the country. Zoopla Research recently conducted a nationally representative survey of UK households which found that 22% remain ‘eager’ or ‘very eager' to move home in the next 18 months as a direct result of the pandemic. As offices confirm their new working practices, more households will be reflecting on their options to move home.
Investment / Lettings
Rental values are rising at their strongest pace since April 2017. Average values across the UK, excluding London, rose by 2.1% in the year to September (ONS). Rental values across the capital remain 0.3% lower year on year.
At +66% the new balance of respondents noting a rise in renter demand across England and Wales is at its highest level ever recorded by the RICS monthly survey.
As with demand, the net balance of agents in the RICS survey envisaging rental growth over the next 12 months is at its highest ever recorded level. The net balance of agents predicting a rise was higher in all regions.
Mon 08 Nov 2021