Latest: property market report
July is a month when people are away on annual leave or are juggling school holidays, and home moving activity usually reflects this. In the last four weeks, however, Rightmove found buyer demand remains strong. In fact, it’s currently 3% higher than the same time in 2019.
So why are purchasers thinking about moving? Mortgage rates began to fall at the end of July, with major lenders cutting the cost of borrowing. Among them were NatWest, Halifax, Virgin Money, HSBC, Barclays, Nationwide and TSB.
Making borrowing more affordable
Those taking out home loans have also started to look at longer repayment terms to make a purchase more affordable. FCA data analysed by Quilter found the number of borrowers taking out mortgages with terms of 35 years or more has increased by 117%. Extended repayment terms make monthly payments lower, although the borrower can overpay or reduce the term in the future.
Prices that please buyers and sellers
Realistic pricing has also returned to the market. Rightmove’s analysis shows the price of property coming to market has fallen by an average of 0.2%. This reduction of -£905 is designed to tempt buyers who may have had to adjust their budgets and to generate interest for sellers.
While Rightmove focuses on asking price, the Halifax House Price Index uses mortgage approval data supplied by Lloyds Banking Group to track house prices. This is a better reflection of what properties actually sell for, after any negotiations. Its latest index showed house prices fell 0.1%, with the typical UK property now costing £285,932.
Pricing correctly has never been more important. Rightmove also found that properties that required an asking price reduction were more than 10% less likely to find a buyer, when compared to those that were sensibly priced from the outset. The portal says the average asking price of a property coming to market now is £371,907.
While there are strong indications that asking prices and the final figures agreed between buyers and sellers are gently decreasing, the same can’t be said for rents. Rental costs are still increasing, with Rightmove’s Q2 report illustrating how much more tenants are paying. Rents have risen an average of 2.5% in the last three months.
The average asking rent for a typical property outside of London is now 33% higher than the same time in 2019 – an increase of more than £300, from £923 per month to £1,231 per month. The sentiment was the same in London. Average asking rents for new tenants in the capital achieved a new record of £2,567 per month – up 28% when compared to 2019.
Tenant demand increases
Rising rents are not deterring tenants. Using its vast bank of data, Rightmove found there are more tenants looking for a property now than in 2022. Its figures also chart the rise in rental demand, with demand currently 3% higher than the same period in 2022, and 42% higher than in June 2019.
With more new tenants registering for properties and supply issues persisting, properties are being let at speed. Rightmove found each vacant let is being filled in an average of just 17 days. This is the quickest time frame since November 2022.
Would-be landlords who are looking for positive signs they should enter the buy-to-let market have additional good news. As well as rising rent levels and an excellent pipeline of tenants, yields are increasing. The picture is also improving as mortgage rates head downwards.
Sourced Franchise analysed UK house prices, rent values and yields between June 2022 and June 2023. Its number crunching found the current average yield in the UK is 5.2%. This is a 0.4% increase since this time last year.
If you would like to know more about your local property market, please get in touch.
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