Home.co.uk's asking price index for June has revealed key market indicators portraying a relatively buoyant and dynamic market under the strain of a growing supply-demand imbalance.
However, oversupply concerns persist. Despite greater market optimism, spurred by improving inflation figures and therefore expectations of a rate cut, demand is looking outpaced.
Vast amounts of properties continue to move through the current UK sales market; aside from three busy months last year, this is a level of activity not seen since the final quarter of 2018, but sales stock levels continue to swell.
The mix-adjusted average asking price increased by 0.5% during the last month but prices remain essentially on a par with last summer overall and have yet to return to their 2022 high.
Notably, the northern regions are indicating significant positive annualised growth while poorer performing regions such as the East of England and the South West remain significantly down compared to June 2023.
This mixed picture of regional market performance, with the North consistently outperforming the South post-COVID, looks set to persist while yields in the northern regions offer considerably better returns to investors.
A cut in the Bank of England base rate is both justifiable, thanks to lower inflation, and necessary to shore up the weaker regional markets.
But Rishi Sunak's decision to call a general election on the 4th of July means the City now expects action later in the summer or even early autumn after the voting is over. Already, the sloth-like inaction of the Bank has put the UK economy at a disadvantage compared to European countries where rates have already begun to come down.
In view of the plentiful supply of properties for sale and the inevitable election disruption, the potential for further price growth appears rather limited over the coming months. More likely is that prices will go sideways until borrowing costs finally come down and boost demand.
Price cutting of properties currently on the market remains within the normal range; in fact, the total of reduced properties is very similar to that observed during the summer months of 2019. Hence, for the time being, most vendors remain hopeful, even in the slower regional markets, but this situation could change rapidly as patience wears thin.
Whilst the Typical Time on Market has increased in all regions except London compared to June 2023, the same median time on market figures remains much improved in most regions compared to June 2019. Therefore, whilst slower than last year, properties continue to move through the market at a fairly normal pace, relative to previous observations.
Asking rents continue to show positive, albeit lower, growth in all regions except Greater London and the West Midlands (-1.7% and -1.0% respectively). Scotland, Yorkshire and the North East still boast double-digit annualised growth. UK asking rents are currently 3.0% above their May 2023 reading.
The annualised mix-adjusted average asking price growth (sales) across England and Wales is now 0.5%; in June 2023, the annualised rate of increase of home prices was still negative at -1.3%.
