The Covid-19 pandemic led to a complete halt in real estate activity followed by the stamp duty holiday which created the chance for the UK property market to boom. From the last quarter of 2020 to 2022, we saw an almost month-on-month increase in the average price of property. Then, with the rising rate of inflation, the increased cost of living and the jump in mortgage rates, the buyer’s confidence was shaken. Buyer demand decreased due to the lack of affordability and due to the uncertainty around the property market and the supply side was short too. Now, as of 2023, are property sales finally beginning to rise as buyers regain confidence in the UK property market? The simple answer, yes. Let’s discuss in detail the factors that are impacting the rise of property sales as well as boosting buyer confidence.
Combating inflation and its impact
As the UK government fights to combat the rising rate of inflation, we are seeing stable mortgage rates in the market again. As of April 2023, there are 65 per cent more homes available on the market for sale as compared to April 2022. And, the percentage of successful sales has risen by a whopping 11 per cent when compared to the pre-Covid era of 2019. Homes are also selling faster across different regions of the UK. Technically, this number is the best benchmark to understand market activity as well as the return of normal market conditions, according to estate agents in Doncaster, as the housing market boomed during the Covid-19 pandemic which led to unprecedented price spurts.
Working towards normalising market conditions
The housing market has seen certain yet stable improvements after the mini-budget session of October 2022. Property sales in the UK are finally seeing an upward trajectory while the demand for properties has reached the highest level when compared to the past few months. Experts believe that rising house prices are directly related to the condition of the market which led them to believe that repricing property values and lower mortgage rates will most certainly increase market activity by the end of 2023. Some market experts predict a whopping 1 million property sales in the UK in 2023, while the average price of property may fall by 5 per cent in certain areas.
Creating demand for affordable housing
The highest buyer demand for property is in some of the more affordable areas of the UK. As the property market is adjusting to the higher mortgage rates, more and more buyers are looking to buy affordable properties. At the moment, the highest buyer demand is in the North East of England, Wales, Scotland and England. This is because these areas did not see a massive price boom during the Covid-19 pandemic. Buyers are not very keen to move to areas where property prices increased drastically, such as the Midlands and the South of England, nor are they interested in moving to areas with higher mortgage rates. As of May 2023, affordable housing is what buyers are most interested in.
Understanding regional disparity in property prices
As of April 2023, the average price of houses in the UK fell by 0.3 per cent after three months of consecutive increase according to Halifax. The rate of annual house price inflation has slowed down quite a bit, from 1.6 per cent in March 2023 to 0.1 per cent in April 2023. These figures show that the average price of property in the UK is pretty similarly priced to that of last year, with the average cost of a home approximating £286,896 in April 2023. With that being said, while the price of existing property may have fallen by 0.6 per cent over the year, the average price of new build homes has risen by a whopping 3.5 per cent over the year. There is also a regional disparity in house price performance this year. In the South of England, where property prices reached the highest level, we have seen a 0.6 per cent drop in property prices over the past year. In areas such as Scotland and Wales, we have witnessed a 2.2 per cent and a 1 per cent, respectively, average property price growth over the past year. As for other areas in the UK, the annual rate of property price inflation has stayed relatively stable, with the West Midlands seeing a 3.1 per cent annual growth in average property price.