Comment

The housing market continues to show a robust and optimistic outlook this month, bolstered by several positive indicators. In June, mortgage approvals reached 59,976, a 12% increase from the previous year and stable compared to May (-0.3%) (Bank of England). New buyer enquiries have also improved, rising by 2% from a previous decline, reflecting renewed interest and confidence (RICS Residential Market Survey).

The recent reduction in the Bank of England’s Base Rate from 5.25% to 5% has significantly impacted the market, marking the first change in a year. This cut has helped stabilise mortgage rates, with some lenders now offering sub-4% rates for borrowers with larger deposits, leading to around £190 in monthly savings for the average UK home compared to peak rates from September 2023. These favorable conditions, along with increased lender competition, have contributed to a 19% rise in potential buyers contacting estate agents (Rightmove) and a 16% increase in sales agreed.

Moreover, the average property price has seen positive movement, with annual house price growth rebounding to 2.7% in June, bringing the average price to £287,927 (Dataloft by PriceHubble). This marks the first time since April 2023 that all UK regions are experiencing positive annual price growth.

New seller numbers have increased by 5% compared to last year, reflecting growing market confidence (Rightmove). With inflation under control and interest rates beginning their gradual decline, the outlook for the remainder of the year is increasingly positive. Rightmove has adjusted its end-of-year price prediction to a 1% increase in new seller asking prices for 2024, indicating a more optimistic market trajectory.

As buyer activity rises, competition for properties is expected to intensify. We encourage anyone considering a move to explore their options now to benefit from the current favorable conditions.

Sources: Bank of England, RICS Residential Market Survey, Rightmove, Dataloft by PriceHubble, ONS, UK HPI

Local Market Roundup

According to the latest Land Registry statistics for the year ending May 31st, 2024, a total of 3,015 transactions were recorded, marking a 33% drop from the previous year. In Worcester, the number of transactions declined by 33% to 1,312. Malvern saw 453 transactions, reflecting a 34% fall, while Droitwich recorded a 35% decrease, bringing the total to 352 transactions.

In the WR Postcode area, the average sales price over the past year for both houses and flats was £291,364. Houses, which made up 86% of sales, had an average price of £321,493. Flats, comprising 14% of transactions, had an average price of £155,440. Regionally, Malvern’s average transaction value held steady at £319,127. Droitwich experienced a slight 2% dip, lowering the average to £277,923, while Worcester’s average transaction value decreased by 2% to £258,879.

The increase in average sales price over the last five years is shown below:

Over the past 12 months, the average rent for let properties in the Worcestershire area was £866 per month, showing a 5% increase from the previous year. Within this area, flats accounted for 41% of the rental market, with an average rent of £722 per month, while houses averaged £1,016 per month.

In Droitwich, the average rent stood at £792 per month, with flats renting for an average of £645 and houses for £1,083. Malvern’s rental market had an average rent of £928 per month, with flats at £888 and houses at £959. Worcester’s average rent remained steady at £852 per month.

Source: Dataloft Market Rental Analysis (rental data is limited and based on achieved rents for approximately 10-15% market share, depending on location)

 

National Market

HMRC reported that 91,370 property sales took place in June 2024, reflecting an 8% increase compared to the same month last year. This rise in sales reinforces the strong market recovery and signals to a positive autumn market. Continuing with positive news, the number of sales being agreed is reported to be 16% higher than it was during the same period last year (Zoopla).

In June, the ONS reported that the average property price increased to £287,924, representing a 2.7% year-on-year rise. UK buyers are currently paying 96.8% of the asking price, up from 95.4% last November (Zoopla).

At Nicol & Co in July, we were pleased to secure an average of 100.1% of the asking price on 52 sales, outperforming the market average by 3.4%. Based on an average sale price of £287,924, this resulted in an additional £9,501 for our clients.

Economy

It was announced on 1st August that the Bank of England would implement the first interest rate cut in over four years, lowering the base rate from 5.25% to 5%. On 17th July, it was reported that CPI inflation for the twelve months to July increased by 2.2%, up from 2.0% in June 2024 (ONS).

Labour is now beginning to outline its post-election plans to drive economic growth, as detailed in their manifesto. A key upcoming date is 30th October, when Rachel Reeves will present the Autumn Budget. Although Labour had promised no additional tax rises in their May 28th pre-election statements, concerns have grown following Reeves’ warning that the Treasury’s finances are in worse shape than anticipated. This has led to speculation that she might adjust her plans to fill the £22bn black hole.

While previous commitments ruled out increases to income tax, National Insurance, corporation tax, and VAT, attention may now turn to other potential revenue sources such as capital gains tax (CGT), inheritance tax (IHT), stamp duty, fuel duty, and possibly council and business rates. The specifics remain unclear, but we will provide updates as more information becomes available.

Lettings Market

It was reported that the average UK rent increased to £1,308 in July, marking a 0.7% rise from the previous month and a 5.2% increase compared to the same period last year (HomeLet). Additionally, the average void period shortened notably from 17 days in June to just 11 days in July, a reduction of 35% (Goodlord).

Examining demand further, letting agents nationwide are receiving an average of 17 enquiries per rental property, more than double the 8 enquiries per property reported in 2019 (Rightmove).

At Nicol & Co, we continue to see significant demand. Our results for July revealed that each listing received an average of 33 enquiries. If you’re a current landlord, or thinking about investing in property, our experienced lettings team is here to provide valuable insights and support. Don’t hesitate to contact us with any questions or for more information.

Market Insight

This market update draws from a range of trusted sources to provide you with clear, evidence-based insights to guide your property decisions. Our team is dedicated to staying current with the latest developments in the property market and is always ready to address any questions or concerns you may have. We strive to provide accurate information to help you make well-informed choices.

Additionally, we offer expert advice through a network of mortgage advisors who can help evaluate the feasibility of moving or re-mortgaging. Feel free to reach out to us anytime; we’re here to assist you in navigating your property journey with confidence.

I am also eager to share insights as we explore this ever-changing market. If you have any questions, please don’t hesitate to contact me directly through our website or connect with us on social media, where you’ll find valuable market updates and information.