There’s no doubt that the property market is cooling after the unsustainable pandemic levels. While the interest rate and inflation have served to moderate buyers’ plans, property values are naturally returning to more sensible levels. Equilibrium is being provided by falling mortgage rates.
Rightmove’s House Price Index is a great barometer of seller confidence and market conditions. Its latest report showed average asking prices adjusted downwards in August. Last month, new sellers were hoping to tempt buyers with asking prices that were 1.9% lower than in July.
Average UK house price drifts downwards
This trend is also reflected in final sold prices. Nationwide’s August House Price Index showed house prices fell 0.8% in the last month. Annually, property values have reduced by 5.3% and the UK’s average house price now rests at £259,153.
Opportunities for first-time buyers
If you’re looking for balance, Zoopla says UK house prices have actually risen 0.1% in the last year. Scotland is leading the way, registering a 1.7% annual rise in property values. Price rises and falls for the remainder of 2023 are forecast to remain minimal.
There is, however, still an appetite to move. Rightmove says properties that are priced right from the outset find a buyer in an average of 27 days. The speed at which buyers are found is rooted in choice – or a lack of. The number of available properties is still 10% lower now, when compared to the same time in 2019.
First-time buyers will be among the most active buyers. Despite renting becoming cheaper than a monthly mortgage repayment for the first time in 13 years, HomeLet’s Rental Index showed the UK’s average rent rose again in August by 1.4%. As a result, Zoopla found first-time buyers now account for a third of sales.
Homeowners looking to add value should explore the eco-friendly path. Anecdotal evidence was already mounting before the Rightmove Greener Homes Report 2023 was released but the portal’s research quantifies how much value energy efficient improvements can add. Its figures come after the analysis of 300,000 properties that have sold twice in the last 15 years.
Add up to 15% in value
A home improved from an EPC rating of D to C could see an increase in value of 3%. While moving up from an F to a C EPC rating could increase a property’s value by 15%. This added value is becoming known as the ‘green premium’.
While homeowners often focus on increasing values, buyer affordability is often overlooked. First-time buyers and those trying to budget will be heartened by the latest news from the Halifax. The mortgage lender says it is more affordable to buy a property this year, when compared to 2022.
The claim is worked out using a ratio of house prices versus income. The cost of a typical UK home is now 6.7 times average earnings, down from a high of 7.3 last summer. In detail, wages have increased by around 7% in the last 12 months, while the UK average house price has dropped from £293,586 to £286,276 during the same period. For first time buyers, a typical entry level property is 5.4 times average earnings, down from 5.8 last year.
Swapping country for city
Levels of affordability are certainly affecting why and where people move. Fresh research by Cornerstone Group International sheds light on property trends. It found 11% of Brits had already moved away from rural areas because they could not afford the cost of living, and now rent in a city.
Cornerstone also discovered 10% will return to a city in the next five years. This is due to the need to be closer to schools, transport links and retail offerings. It’s a similar picture for investors, with 18% planning to invest in a city property, rather than a rural area.
If you would like to know more about your local property market, please get in touch.
Subscribe to receive the latest property market information to your inbox, full of market knowledge and tips for your home.
You may unsubscribe at any time. See our Privacy Policy.