September market snapshot
Right now Government actions and headlines determine how we feel about our personal circumstances, and our ability to move home.
But let's look at the facts and fundamentals as we navigate the current, fast-changing economic and political climate so that we can make pragmatic considerations on all things property related.
What’s the big picture with house prices in Bristol? Property prices in Bristol have climbed 8.4% this year, adding £25,500 to the typical home, according to our August 2022 House Price Index. Just ahead of the UK average where prices have risen by 8.2% since August 2021. Keeping in mind values rose by 9.4% in 2021, the typical Bristol home is now worth £328,700, and the UK average increase since the start of the pandemic is 23%. As we see prices fall marginally in the immediate future, perspective will be key.
As we all know the government's mini-budget has created uncertainty in global markets, leading the Bank of England to intervene to stabilise the markets. There are concerns interest rates will rise more than predicted. The Bank of England has raised the base rate of interest to 2.25%, the seventh consecutive rate rise. The 0.5% rise is lower than the 0.75% many expected. The current rate of inflation is 9.9%. The UK economy grew by 0.2% in the second quarter of 2022, revised upwards from a reading of -0.1%. The new figures indicate the economy remains 0.2% smaller than pre the Covid pandemic.
“Cuts to energy bills, income tax and national insurance could become footnotes in Liz Truss’s economic plan, all dwarfed by higher mortgage bills.” “The recent volatility is naturally causing buyers and sellers to hesitate. The only thing that moves quickly in the UK housing market is sentiment and it’s been damaged over the last seven days,” he added. “Even if the government can start to reverse the impact of the mini-Budget, the reality of higher rates has dawned on people, wherever they end up peaking. “Average UK prices have risen by 23% since the start of the pandemic, so even if they declined 10% in 2023, this would take us back to where we were last summer.”
Tom Bill, head of UK residential research at Knight Frank
The average price of property coming to market rose by 0.7% (+£2,587) to £367,760 in September, 1.1% in Bristol. Price growth this month is driven predominantly by the middle and high-end market sectors. Buyer demand in these sectors is up by 2% even compared to the frenetic market of last year, while more choice is now also available compared with 2021. These numbers suggest that for those who can, moving up the ladder to a home with more space remains a priority, even at a time when personal finances are stretched.
Close to 105,000 property sales took place in August, the strongest August since 2007 according to data released by the HMRC. Nearly 310,000 sales took place June-August, a fall of 4.2% from the three months previously.
The Bank of England reported over 74,000 mortgages were approved in August, approvals up 11.1% from a year ago. Year-to-date approvals for home purchasers are 3.1% higher than the pre-pandemic (2015-2019) average. Buyer demand in September remains 20% higher than the pre-pandemic five-year average according to Rightmove but is weaker than a year ago.
The housing market continues to be extremely resilient even in the face of the economic headwinds that are stretching household finances. The rising cost of living is increasingly playing a role in some buyers’ considerations, as they look at their budgets and what they can afford. Demand has been softening over the last few months, but Friday’s announcement is likely to stimulate some more demand. If it does lead to a big jump in prospective buyers competing for the constrained number of properties for sale, then it could lead to some unseasonal price rises over the next few months. The first-time buyer threshold change means we could see more first-time buyers who can afford it making a jump to a bigger home as their first move. With more buyer demand we would also expect that the current trend of more properties coming to market will continue, offering more choice for buyers.”
Tim Bannister Rightmove’s Director of Property Science
Rising mortgage rates will impact buyer demand. Buyers will need to allocate more of their monthly outgoings to a mortgage or reconsider the price point of their purchase.
Our offices remain busy as we compile this update, there is a strong level of seller enquiries and home valuations. Buyer demand is clearly more cautious and price sensitive but our diaries remain full at this time. We await the longer-term impacts of mortgage availability, raising interest rates and how inflation impacts us all. Bristol's economy and property market's famous resilience will be tested but no doubt remain strong. As always, our teams are here to help in every way possible, get in touch with any questions or concerns.
Wed 05 Oct 2022