The UK property market ended Q1 2023 on a high, with good news for landlords and homeowners alike. 2023 property news so far shows that any uncertainty from last year is behind us and we can look forward to more positive times ahead.
We’ve taken a look at the latest reports to bring you a comprehensive property market update for March 2023.
House prices remain steady
The best starting place for any UK property market news is house prices. This has understandably been a concern for homeowners and landlords as reports of falling property values across the country and growth coming to an end – but is this the case in reality?
The latest Zoopla UK House Price Index report shows that buyers are returning to the market in numbers and more new sales are being agreed. Demand overall has reached its highest level since October 2022, and is 16% higher than the same time in 2019.
Another way to find the true health of the market is to look at overall sales volumes. Overall, sales agreed are 11% higher than in 2019, and the supply of homes on the market has increased by 65% in the last 12 months.
This is good news for the market when look at in its entirety. It signifies confidence in housing and also the mortgage market following the 2022 turbulence in that area. Zoopla expects to see 500,000 sales agreed in the first half of this year in total as business gets back to normal.
Richard Donnell, Executive Director of Research at Zoopla, says: “Buyers and sellers continue to agree sales, which is an important and positive indicator for the market. Sellers have to be realistic but it’s clear that prices do not need to adjust lower to support transaction volumes in 2023.”
The housing market is in a good place. Property prices are growing at a rate of 4.1% annually on average and more is expected over the course of the year. This is exceeded in cities like Birmingham (6.1%) and Manchester (5.8%) as they continue to lead the way.
Further reports from Savills also offer encouraging news. Their research notes that first time buyer numbers remain 8% higher than the pre-Covid average despite how tough it has been to secure an affordable mortgage for many.
Perhaps due to those aforementioned mortgage issues, the number of cash buyers is also up 10% compared to before the pandemic. Cash buying offers particular benefits for people buying property off-plan as they can buy property at a below-market rate and then generate equity over the construction period as the market continues its recovery over the coming years.
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UK rents growing fast
The other side of the property market is renting, and in this area there is plenty of good news for investors. Returning to Zoopla, we can see in their March 2023 UK Rental Market Report that rents have grown by 11% on average across the UK in the last year.
This has been caused by a stronger employment market, troubles in the mortgage market which have kept people renting longer than they otherwise would have, and a further imbalance between supply and demand which is acting to push prices upwards.
The latter is an interesting, and arguably the most impactful, factor. The Zoopla report states that rental demand is 51% higher than the five-year average for this time of year, but at the same time notes that there has only been a 1% increase in the number of available homes for rent when compared over the same time period.
With this in mind, it is easy to see why rents are increasing so rapidly. With growth in overall rental supply set to remain limited over the rest of 2023, it is likely that rents will keep increasing as the supply and demand imbalance becomes ever more skewed.
Richard Donnell says: “The demand for renting was incredibly strong in 2022 helping push rents up by 11%. Rents will continue to rise over 2023 but at a slower rate as demand moderates and affordability pressures start to bite harder on renters.”
We can see the effects of the increased demand by looking at Rightmove’s Q4 2022 Rental Tracker. In that analysis, the Rightmove team forecast that asking rents would increase by an average of 5% across the whole of 2022.
Rightmove’s Director of Property Science Tim Bannister said: “Although the fierce competition among tenants to find a home is starting to ease, it is still double the level it was back in 2019. This is why we’re forecasting that the pace of annual growth will ease to around 5% by the end of the year nationally.”
If rents are currently 11% higher on average year-on-year, then we can see that this prediction is already looking conservative just three months after it was made. Not only are rents increasing, the rate at which they are growing may also be speeding up.
The UK property market is in a good place as of March 2023 with positive news for both homeowners and investors. If you are looking to buy a new property, this could be the ideal time as there are indications that a new cycle of growth could be around the corner.
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