Overall home price rises are being kept in check by high stock levels and stubbornly high mortgage costs.
However, according to the latest market analysis from Home.co.uk, there is regional variation. While Greater London, adjacent regions and the South West remain in recovery mode, the northern, Scottish and Welsh markets have more than made up for lost ground following the shock price drop in December 2022 and continue to thrive.
Key market indicators show that, despite lacklustre performances in the southern markets, the UK property market is in much better shape overall than in 2019.
This is clearly remarkable and perhaps counterintuitive given the current higher levels of stock for sale and substantially higher borrowing costs.
Rental market
During the same 5-year period, UK rents have risen by 44.6% and this meteoric rise has provided enormous support for the sales market. Moreover, this support has a regional bias with respect to gross rental yields which are higher in the North.
Clearly, without this vast support from the rental market, the sales market would be in a much worse state. Keir Starmer's new government needs to understand that rent fundamentally underpins the value of property and therefore future legislation regarding the lettings market should be very carefully considered.
Indeed, activists' calls for rent controls and an end to contractual tenure casts dark shadows over the future of both the sales and rental markets.
The mix-adjusted average asking price for England and Wales increased by a muted 0.2% during the last month and, while a little above the high of last summer, remains below the highs of 2022.
Given that inflation has fallen below target, a cut in the Bank of England base rate is becoming long overdue. The Bank's reasoning for persisting with high rates to curb wage growth seems both cruel and cynical, given that remuneration is merely catching up with the cost-of-living rise that the same institution created.
Meanwhile, the wider UK economy continues to suffer while European competitors already benefit from the first rate cuts. Investment in much-needed new-builds is also being thwarted by unnecessarily high interest rates. In particular, additional new energy-efficient rental stock is required to ease the shortfall of properties available to let. In July 2019, 122,000 properties were available for rent while today the total is 66,000.
Despite buyers' frustration with borrowing costs, vendors remain patient. In fact, price-cutting of properties while on the market declined between May and June, in terms of both the number of properties and the average discount.
Indeed, the Typical Time on Market remains very reasonable given the higher stock levels; it is slightly slower than last year when stock was limited but considerably better than in July 2019.
Asking rents continue to show positive, albeit lower, growth in most regions although year-on-year falls are evident in Greater London, East Midlands and the West Midlands (-1.2%, -0.6% and -0.5% respectively). Scotland, Wales, Yorkshire, the South West and the North East indicate double-digit annualised growth.
UK asking rents are currently 2.5% above their July 2023 reading.
The annualised mix-adjusted average asking price growth (sales) across England and Wales is now 0.7%; in July 2023, the annualised growth of home prices was in the red at -1.5%.
