A surge in buyer demand, strong seasonal expectations and optimism of further reductions in mortgage rates have driven UK home prices higher.
However, while this burst in sales activity presents several positive metrics regarding the current UK housing market, dark clouds remain on the horizon, warns property website, Home.
Prices during March have risen in Scotland, Wales and all English regions except for Greater London, where oversupply has thwarted the expected seasonal uptick. Indeed, oversupply is a growing problem as ever greater numbers of vendors instruct agents across the UK.
Corresponding record sales stock levels (the highest April figure since 2013) give much cause for concern, given that demand will fall back now that the stamp duty deadline has passed.
Annualised price growth remains weak overall, and the mix-adjusted national average asking price has yet to regain the high set in 2022. The weakest price growth continues to be evident in the southern regions, where rental yields tend to be lower.
Rental Market
A further dark cloud menacing the market is the impending Renters' Rights Bill, which is likely to become law in July and put into effect from October onwards. The various provisions within this legislation look set to reshape the private rented sector, favouring the rights of tenants over those of landlords.
Understandably, such a fundamental shake-up of the PRS is causing concern and anxiety among landlords, many of whom are considering or actively quitting the sector. This negative sentiment is only adding to the number of properties being placed on an already bloated market.
UK annualised asking rent growth slipped into the negative this month (-0.7%), driven down by a rise in supply of 22% overall. This is a significant drop in real terms when inflation is factored in. The decline in the national average rent was driven by falls in London, the West Midlands and Yorkshire. Meanwhile, the East Midlands continues to outperform, indicating rental growth of 9.3% year-on-year.
The annualised mix-adjusted average asking price growth (sales) across England and Wales is now 1.4%; in April 2024, the annualised growth of home prices was 0.8%.
