Nationwide’s latest House Price Index showed that after three years of rising values, stability has been restored. February 2023 marked the first annual decline in prices since June 2020, with a -1.1% year-on-year drop. In the last month alone, prices have fallen -0.5%.
With a market returning to more ‘normal’ territory, expectations need adjusting, as a new report from Zoopla revealed. It showed the gap between asking prices and achieved prices is widening. Currently, sellers are reducing their asking price by an average of -4.5%. This translates to a £14,100 discount per sale.
Small reductions vs pandemic gains
The portal did, however, highlight that today’s reductions should be balanced against pandemic gains. Zoopla says £42,000 of value was added to the average home during Covid times. This works out to average price growth of +33%.
Almost £50,000 added to value
It’s a point Halifax is also keen to emphasise. It says the UK’s average home has increased almost £50,000 since the start of the pandemic. According to its figures, that’s a +20.4% inflation. For context, prices between January 2017 and December 2019 increased by an average of +7.8%.
Zoopla’s latest research also revealed an improved supply of homes for sale now, when compared to the same time in 2022. In fact, stock levels are up +60%. It comments that the average estate agent now has 24 homes for sale. This compares to just 15 a year ago.
Buyer numbers are also recovering when compared to the autumn of 2022. The portal says purchaser demand rebounded in the first two months of 2023 – +8% up on hopeful buyers noted during the same period in 2017 and 2019.
If you’re questioning whether now is a good time to sell your property, a new study by Rightmove might persuade you. With millions of data points at its disposal, the portal is in a great position to declare when is best. Analysis over a five-year period, excluding 2020, revealed March to be the optimum month.
March earned its selling crown as it’s when Rightmove usually sees its highest number of buyers enquiring about properties for sale. It’s also when it sees a peak in property stock, and when buyers stand a good chance of offering and completing in time for the summer months.
UK rents return to rising ways
While house prices have started to shed some of the value gained during the pandemic, it’s a different story in the lettings market. Rents are rising again after a small reduction in January. HomeLet says the new average rent in the UK is £1,175 per calendar month – +0.3% higher than four weeks ago.
When looking at the long term pattern, every UK region continues to see annual rental growth. To illustrate, rents in February 2023 are now +10.2% higher than at the same point in 2022. Greater London has seen the highest year-on-year rental increases, at +12.4%.
Yields post yearly increases
Increasing rental values have had a direct impact on landlords’ returns. Some rental yields in the UK have increased by as much as +2.5% in the past 12 months. The analysis, by Sirius Property Finance, puts the average rental yield at 4.08% – up +0.19% in the last year.
Demand for rental properties looks set to remain high. A survey of more than 1,000 tenants found 83% want to purchase property but over 75% believe that they won’t be able to do so this year. Finbri’s research found an inability to save for a deposit, high mortgage rates and being locked out of the mortgage market will keep tenants in rental accommodation.
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