With the economy a key battleground in the electoral race, it remains to be seen who is set to enter the door of Number 10, and where housing will feature in the forthcoming political agenda.
Nicky Stevenson, comments: “As inflation continues to edge upwards, public sector pay negotiations make the headlines and the war in Ukraine continues, the economic response of the UK’s next prime minister is set to matter."
"While the UK economy grew by 0.5% in the year to May, now estimated to be 1.7% above its pre-coronavirus COVID-19 pandemic levels, the IMF report the global economy has shrunk for the first time since 2020. In response it has downgraded expectations for economic growth in 2023, predicting UK growth of just 0.5%, far lower than its 1.2% forecast in April.
"UK inflation is currently at 9.4% in the year to June and at its highest rate since 1982, is not expected to revert to the government’s 2% target for two years. As expected, the Bank of England hiked the interest rate by a further 50 basis points, bringing the base rate to 1.75%, its highest level since December 2008.
“The current situation is not confined to the UK but is a global issue. As a result, the Eurozone raised interest rates for the first time in a decade in mid-July, while the United State Federal Reserve raised its target benchmark interest rate to between 2.25% and 2.5% after two consecutive 0.75% rises in June and July.”
While they have slowed, property prices continue to rise across England and Wales, with low levels of stock continuing to underpin prices. Buyer demand continues to run above pre-pandemic levels, but levels of new buyer enquiries are starting to ease.
Stevenson continues: “RICS report the net balance of agents predicting price growth over the next three and 12 months, while still positive across all regions of the UK, has pared back from the levels witnessed at the start of the year. At 95,420 the estimate for sales volumes in June is 8% lower than in May, and 6% lower than the pre-pandemic average between 2015 and 2019. The HMRC data indicates this is the first time in 2022 that volumes have dipped beneath 100,000. Considered a barometer for future market activity, mortgage approvals also fell below their pre-pandemic average in June.
"According to the Bank of England, 63,726 mortgages were approved in June, the lowest monthly total since the COVID-19 market shutdown. Lending however remains high with remortgage activity in 2022 tracking above average. At present many buyers remain resolute on price, less than half of properties listed for sale for more than ten weeks having been reduced in price.”
Looking specifically at the prime markets across England and Wales, Stevenson says that the upper end of the market continues to perform well across many regions.
Stevenson concludes: “The price threshold for a premium property now stands at £783,000, while the average price of a prime market property, at £1.2 million is 2.6% higher than a year ago. More than one in three agents report that sales prices are coming in above asking prices for properties marketed at between £500k and £1 million. Higher levels of negotiations are taking place on properties listed at more than £1 million. The prime markets of London and the South East are currently seeing the strongest levels of price growth of all markets across England and Wales."
