The state of the property market

Simon Keeler, Associate Solicitor at Mayo Wynne Baxter, examines current mixed trends.

As conveyancing solicitors, we are always busy working on the front line of property transactions making it sometimes difficult to take a step back and predict the future. I find economists are good at analysing historic events but not so good at predicting the future. 

In any event, I have been keeping an eye on the news and it appears to me that the property market is currently experiencing mixed trends. Probably only the weather is more unpredictable than our property market. 

Here are some insights I have collated collated as part of my property market research:

• The average house price in the South East is now more than £100,000 higher than it was a year ago.

• The strongest house price growth is being seen in the commuter belt around London.

• The number of first-time buyers in the South East has fallen by 20% in the past year.

• The average rent in the South East is now £1,500 per month.

• Average incomes may not keep pace with home price rises.

• Local house prices will be determined by how desirable a particular location is and how many similar properties are available.

• A recession is not expected this year.

• Housing policy appears to be becoming increasingly politicised.

According to the Land Registry’s UK House Price Index, the average price of a property in the UK rose by £11,000 between March 2022 and 2023, which is a 4.1% year-on-year increase. 

House prices in the South East of England have been rising faster than in any other region of the UK in recent months. In April 2023, the average house price in the region was £495,000, up 10.4% from a year ago. This is significantly higher than the national average of £385,000. There are a number of factors that may be driving house price growth in the South East which includes strong demand from buyers and a limited supply of homes on the market.

However, there are some signs that the market is starting to cool. In May 2023, the number of house sales in the South East fell by 10% compared to the previous month suggesting that demand may be starting to plateau.

There are a number of factors that are contributing to the slowdown in the South East housing market. These include inflation, rising interest rates, which are making it more expensive to borrow money, and also the cost-of-living crisis, which is putting pressure on household budgets. Some predict interest rates could rise above 6% by the end of the year. However, the region is still expected to remain one of the most expensive areas in the UK to buy a home.

Despite the slowdown, house prices in the South East are still expected to remain high in the coming months. This is because the region is one of the most desirable places to live in the UK, and there is a limited supply of homes on the market. Cash buyers could win out over borrowers as mortgage rates rise and businesses in the region that are involved in the housing market, such as estate agents and mortgage lenders, should be aware of these trends and adjust their strategies accordingly.

I heard the best way to make someone panic was simply to tell them that house prices are falling, although estate agents are reporting that there are still significant numbers of people looking to move with demand outstripping supply. 

In conclusion, the English property market is experiencing mixed trends. While the average price of a property in the UK rose by 4.1% year-on-year, existing property prices have fallen by 0.6% over the last year. Local house prices will be determined by how desirable a particular location is and how many similar properties are available. The mismatch between buyers and sellers is caused in part by homeowners who are inclined to sell but are sitting on the side-lines, scared off by the steep prices and mortgage rates that they would face as buyers.

skeeler@mayowynnebaxter.co.uk

www.mayowynnebaxter.co.uk