We are firmly into the second quarter of 2023 and the UK property market has been as active as ever. There is lots to analyse and more to look forward to for the rest of the year as property continues to perform strongly and deliver great results for both homebuyers and investors.
We’ve taken a look at the latest data to bring you our property market update for May 2023.
The worst has passed
The last year has been defined by economic uncertainty in many sectors including the property market. The cost of living crisis has hit peoples’ ability to buy and house prices have suffered because of it in many markets.
However, the latest monthly House Price Index from Zoopla in April indicates that the worst may have passed and the future could be a lot brighter.
Richard Donnell, Executive Director of Research at Zoopla, said: “The worst of the pricing adjustment in the housing market appears to be behind us [and] transaction volumes continue to grow.”
Those transaction volumes are based on a sustained recovery in demand and the continued growth in the number of new sales agreed.
Demand for homes is at its highest level so far in 2023 following the Easter break, and is 14% higher than in 2019 before the Covid-19 pandemic. The number of homes on the market has increased by 66% year-on-year according to Zoopla, and it is this level of choice which has seen agreed sales increase by 6% - in line with the five-year average once again.
Three-bed homes are still the most in-demand property type but buyer interest has fallen back to 40% in Q1 2023 while demand for 1 and 2-bed flats increased over the same time period. This was especially true outside London, the average asking price for a 2-bed flat is 29% lower than a 3-bed house.
Smaller properties are especially popular in city centre markets like Manchester. Developments such as Vision and Urban Green see a huge amount of interest in their one- and two-bedroom apartments as they are the perfect size for young professionals, couples and small families, as well as being a reasonably priced option either to buy outright or to rent in.
This is in spite of Manchester property prices rising by 4.7% year-on-year, a figure well in excess of the national average (3.0%) recorded by Zoopla at this time.
UK rents continue to rise
As house prices remain unaffordable for many due to a combination of the cost of living crisis and rising mortgage rates, more people than ever before are staying in the private rented sector.
This reality has made for greater competition and increasing prices across the UK. April 2023 was no exception, with Rightmove reporting that average monthly rents outside London reached a record £1,190 pcm, with rents in the capital exceeding £2,500 for the first time.
At the same time, while the number of available rental properties on the market has increased by 6% over the last 12 months, it is still 46% lower than in 2019 – suggesting that high rents are here to stay, and are in fact likely to continue going up even further.
Tim Bannister, a director a Rightmove, said: “We have seen some early signs of improvement on squeezed supply levels this year, though with no significant influx of new properties becoming available to rent currently on the horizon, the mismatch is set to continue for some time.
“Many agents are having to manage a very high volume of tenant inquiries for every property that they let in the current market. Properties in popular areas within an affordable asking rent range of that local area are likely to be snapped up almost immediately, and on average homes are finding a tenant much more quickly than this time in 2019.
“Although there are some early signs that the gap between supply and demand is starting to narrow a little, it will still feel very competitive for tenants trying to secure a home.”
The UK property market is in a good place right now, with signs that the worst of the uncertainty is past. House prices are stabilising and look to be at the beginning of another growth cycle, making this a good time to buy for both homeowners and investors.
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