Housing Market Update April 2023
Buyers continue to return to the housing market
An important indicator of market health is the number of new sales being agreed - homes sold ‘subject to contract’ and the sales market continues to see a return of buyers with more new sales being agreed. According to Zoopla’s most recent House Price Index*, the demand for homes reached its highest level since last October when the fallout of the mini-budget hit activity. We have actually seen an 18% increase in new sales being agreed year to date, compared with 2022. Across the UK, demand is 16% higher than this time in 2019*. Year to date, we have sold 90% of homes brought to market, compared with 82% this time last year. Last year saw a chronic undersupply of homes for sale, which pushed prices higher but acted as a drag on sales completions.
House Prices
We have noted an increase in properties for sale this year, compared to 2022. The average estate agent has 25 homes available compared to a low of 14 homes this time last year*. This is a positive change and improves buyer choice, meaning sellers need to price sensibly if they are serious about moving.
Sellers continue to make very modest downward adjustments to asking prices, this of course ensures pricing matches what buyers are prepared to pay. We have noted our sellers are accepting discounts to the asking price averaging 2% year to date, compared with sellers on average achieving on average 2% over the asking price last year. The scale of price gains over the pandemic enables sellers to adjust pricing while continuing to agree sales, unlocking their desire to move and supporting sales. A key consideration for anyone looking to sell in 2023 is to make sure their home is competitively priced and in line with what buyers are prepared to spend in the local market. In this regard, we should remember that since the start of the pandemic house prices in this area have increased by circa 20% and so we are, therefore, still in a positive position. We should also remember that even if we are selling at less – we should almost certainly be buying at less too!
On a larger scale
On a larger scale, all areas of the UK are registering an improvement in market conditions with some areas doing better than others. Zoopla continues to register above-average demand for housing in the most affordable areas led by Wales, Scotland and the North East of England and London.
It was without a doubt expected that demand is weaker in regions where prices jumped the most over the pandemic and where prices are higher than the national average. These are markets where higher borrowing costs impact buyer power, covering the Midlands and southern half of England.
Time to sell is 7% longer than last year - but still quicker than in 2019
We have noted that the time to sell a home - from being first listed to going under offer – has increased by 7% (8 days) since this time last year when the market was very strong.
However, the time to sell remains below 2019 levels, with time to sell a home taking on average 73 days longer in 2019.
First-time buyer numbers hold up
The rapid pace of rental inflation - up 11% in the last year - is also keeping pressure on would-be first-time buyers in the rental market to become owners.
We believe that first time buyer numbers will continue to hold up this year as would-be buyers seek smaller homes and better value for money.
Lettings Review
The reason why buy-to-let remains attractive, despite growing red tape is simply that demand for rental homes is still strong.
From 2 million at the Millennium, the number of privately renting households reached 4.6 million in 2022, and overtaking social housing in the process. With the rapid increase of rent PCM up 11% in the last year, rents are now at their highest, historically in many cases. Rent reviews and increases with a tenants term are growing on average 5% to 7% per year, with landlords outgoings not growing as rapidly.
There are currently extremely short void periods between tenancies – to put this into context, in pre-covid times, there was on average 19 days in between tenants vacating and a new tenants occupation. Now it is on average 5 days and in statistical terms, sometimes as little as 1 or 2.
There remains a very high caliber of prospective tenant – understanding that time lines are pressing, that being organized, prepared, and honest from the outset is an advantage, so speeding up the process for themselves, the landlords and agents alike.
A noticeable contribution to the current market conditions of reduced supply and greatly increased demand, is the average length of tenancy running up to 3 years.
The upshot, it remains a good time for investors and great time to be a landlord. Despite the constant changes in landlord legislation, and the requirements these bring, the complexity of simplifying things and taking the worry or burden away from a landlord, is what makes a letting agent the valuable asset they are for a landlord and investor.
Outlook for the housing market in 2023
We saw the housing market at end the first quarter of 2023 being in much better shape than many predicted at the end of 2022 and we have a positive outlook for sales completions over 2023 with several factors supporting the desire to move.
Working from home 1-2 days a week is becoming the norm for many people which means buyers can look further afield for a home than has been the case in the past, enabling a search for better value for money.
The spike in retirement caused by the pandemic is also a trigger for home moves. At the same time, cost-of-living pressures will continue to encourage some to down-size from larger homes that are expensive to run.
The market is going through a soft re-pricing process with modest quarter-on-quarter price falls and there is no evidence of a major mismatch between buyers and sellers that would suggest house prices and transaction volumes are going to suddenly drop lower.
Here at Dawsons, we take immense pride in being a multi award-winning, reputable, and respected agency with a long-standing history and affiliation within Swansea and our local communities. Our sales and lettings teams provide unrivalled knowledge of the local property scene and our market intelligence is second to none to ensure you receive up to the minute advice on buying and selling in Swansea and Llanelli.
If you would like any further information or no obligation advice, contact Cat Sollis (Senior Digital Operations Manager) for further information on 01792 362031 or email cat.sollis@dawsonsproperty.co.uk.
Like our blogs? Read March review here
NB: If your house is presently on the open market, please do check your agency agreement to ensure that you are free and able to list your property with another agency and that you are not tied to a contract.
*Zoopla’s House Price Index: https://www.zoopla.co.uk/discover/property-news/zoopla-house-price-index-march-2023/