Despite the summer sun, property prices do seem to be doing OK, even with the ‘normal’ doldrums they would see this time of year.
According to Rightmove: “The average price of property coming to the market for sale drops by a seasonal 1.3% (-£4,969) this month to £368,740. August’s price drop is in line with the ten-year average following the bigger than usual falls in June & July.”
However, the good news is that this is helping to deliver far more sales according to the indices – and it’s much better for buyers, sellers and agents to have more transactions than rising prices.
Overall, though, both transactions and prices are positive, which, if you’d asked anybody a few years ago: if we would rapidly and dramatically increase the cost of mortgages, would the market recover small falls in a couple of years’ time ? We’d probably all have answered ‘not a chance’! But, for most properties in most markets, it has.
Varying buyer demand
Zoopla have some great charts this month which show how although each region is performing positively, the degree of growth year on year is quite diverse:
This chart highlights the variation in buyer demand across the Midlands. In the East Midlands, demand has surged by 18%, while in the West Midlands it is only around half that level, despite both regions having similar property price profiles.
What’s more, while buyer demand in the West Midlands has risen by around 8%, sales agreed have only inched up a few percent – compared with a much stronger 14% uplift in the East Midlands.
In contrast, Wales has opposing indicators too, with sales agreed up almost 10% while buyer demand is only up around 6%.
It’s clear there is a connection between the two indicators, but it’s also not entirely straightforward, so there must be other factors at play, which Zoopla put down to:
“These trends are consistent across all UK regions, as buyers actively seek to finalise sales before the school holidays and the August slowdown.
“A significant catalyst supporting this activity is the recent relaxation to mortgage affordability testing. Those using a mortgage can now borrow up to 20% more than they could 3 months ago, without any change to their income or the mortgage rate offered.”
Their regional analysis becomes even more interesting when they examine house price growth. The East Midlands which has the highest buyer demand and sales agreed growth, isn’t seeing this translate into higher prices.
Useful advice from Zoopla suggests that for agents in southern markets, “a focus on precise valuation and highlighting unique property features is crucial to differentiate listings amidst higher supply and slower growth.”
Commentary on the regional performance by indices
“Northern regions, Wales and Scotland are registering the strongest price growth at 2-3% over the last year. Northern Ireland leads with 6.1% due to its lower starting point. These areas represent key growth markets for expanding investor portfolios, offering capital growth potential as well as strong rental growth.
“In the South of England, annual house price growth is below +1%, ranging from +0.2% in the South East and London to +0.8% in the East of England.”
“Among English regions, the North West and Yorkshire & the Humber have the highest rate of property price inflation, up +4.0% over the last year to £242,293 and £215,532 respectively.
“The South West, London and the South East continue to see moderate growth, with prices rising by just +0.2% and +0.5% respectively. London remains the most expensive part of the UK, now averaging £539,914.”