A Review of the Key Trends in the National and Local Housing Market
Price moderation and a sales slowdown are likely over the coming months but should be considered in the context of economic history, the frenzied post-pandemic market and the longer-term outlook.
The market in context
The Autumn Statement provided a sobering assessment of the UK economy, but forecasts for the housing market are less dramatic than during 1989–1993 and the Global Financial Crisis in 2007/8. Inflation is expected to peak during the final quarter of 2022 before falling back over the course of 2023, and unemployment looks likely to remain lower than the 10-year average (5.3%).
The Global Financial Crisis, caused by banks lending more than borrowers could afford to pay, led to the more stringent mortgage lending criteria imposed since 2014. Today, only an estimated 4.2% of homeowners have less than 10% equity in their home.
Property price growth is moderating and price correction is forecast. At 7.2% in the year to October, annual price growth remains considerably stronger than the 3.3% average between 2010 and 2019. Since June 2020, average property prices have risen by close to £50,000, the equivalent of 24%, with lockdown and lifestyle changes spurring the market. Single-digit price correction is predicted for 2023/2024 before price growth is anticipated to return in 2025. Buyers will continue to benefit from the 0% rate of stamp duty up to £250,000 until March 2025. With almost one in three movers ‘needs-based’, such buyers will present sales opportunities.
Rises and cuts
The Autumn Statement confirmed a raft of spending cuts across Whitehall and tax rises through changes and freezes to tax thresholds. At 5.7% in the year to September, wage growth is at its fastest in over 20 years, but the conflict in Ukraine continues to impact energy costs and food prices, and a package of measures remains to support the most vulnerable. Expectations for interest rates, gilts and swap rates are up to 1% better than in the immediate aftermath of the ‘Growth Plan’, although mortgage rates of 5% to 6% will be usual for those seeking to purchase or remortgage.
Demand for quality rental housing continues across the UK. A shortage of stock and additional demand from prospective buyers, who may well rent in the short term as opposed to buy, continues to fuel prices. Average rents in the UK rose again in October to £1,171. Excluding London, average monthly rents now stand at £976. Annual rental growth in Scotland has doubled in the past year, with emergency legislation passed by the Scottish Government to freeze rents and evictions for both the private and social rented sectors until at least 21 March 2023.
2023 will inevitably prove a very different housing market to 2022 but there will still be buyers who need to buy, and sellers who need to sell. Over the longer term,forecasts for growth remain positive.
Calculating Energy Costs - What Costs Watt?
Calculating energy use
The average household uses 1,000kWh of gas and 241kWh of electricity per month , but being smarter and more efficient with energy is everyone’s goal this winter. Smart meters are helping many keep track of their spend, and it is possible to estimate how much energy any appliance uses, by multiplying its power rating in kW by how long (minutes/hours) it is on.
Turn down, turn off
Alongside heating, the most expensive home appliances are often electric showers, washing machines and tumble dryers. Cutting down on shower time, ensuring loads are full, and using a lower temperature and/or a shorter cycle can all help. Although computers, TVs and stereos are less energy-guzzling, turning appliances off standby mode and not leaving laptops or mobile phones on charge unnecessarily will all save money.
Calculating energy use
Air fryers and slow cookers are considered the most energy-efficient ways to cook, while a microwave uses up to 80% less energy than a conventional oven. Induction hobs use energy more efficiently than a gas or electric ceramic hob; traditional ovens are considered the costliest way to cook. An energy-efficient (A-rated) fridge-freezer could save close to £70 a year compared to one rated D.
National Market Conditions
Annual price growth in the UK has moderated back from the double-digit price growth that has epitomised the market in recent months, with all major indices placing growth firmly in single digits as the year draws to a close. Average asking prices fell by 1.1% in November compared to October, with all regions experiencing a slight fall (Rightmove).
Buyer demand is returning to pre-pandemic norms, with mortgage approvals in recent months slowing (Bank of England). Realistic pricing for market conditions will be paramount in achieving a sale as the market recalibrates
2022 is set to be the busiest market since 2017, with the exception of 2021. Zoopla estimates there are around 293,000 sales currently in the pipeline to be completed before the end of the year. Sales volumes are predicted to be around 1 million in 2023, a level more on par with the pre-pandemic norm (Zoopla, JLL). October saw a 13% uptick in new supply to the market compared to a year ago, although stock levels remain low by historic standards (RICS).
Across the South West and South East the time taken to sell a property has nudged upwards over the past month. However, at 37 and 41 days respectively, they remain considerably less than 65 and 69 days in October 2019 (Rightmove). Swindon and Hart are currently the most active property markets in the region.