The spring home-selling season is off to a great start, and any signs of a slowdown in the UK property market have all but vanished. According to the most recent figures from Zoopla, UK house prices have climbed by 8.1% in the past 12 months, which is 4.1% higher than the figure we saw in February 2021. This is exceptionally fast for this time of year, showing the resilience of the 2022 property market. *
As pandemic-driven trends continue, new supply of homes for sale is increasing, and some sellers are looking to lock in their gains by selling up. This pattern is expected to continue in the coming months, as rising prices and robust demand prompt more homeowners to sell.
Fresh supply of homes has not been enough to balance high levels of activity, meaning total stock levels have remained low, putting upward pressure on house prices. As a result, over the last 12 months, price increase has ranged from 11.8% in Wales to 3.2% in London, adding to a cumulative five-year price growth of 35% to 6.5%.
The market’s localized nature is also evident at a city level, with Liverpool leading price increase among the UK’s main cities, with a 10.3% increase year on year and 32% in the last five years.
Nottingham is next, with an annual growth rate of 9.5% and a value increase of 36% since 2017.
The spread of house price growth across the country is being driven by affordability levels. The markets with the highest demand and lowest average prices have seen the biggest price growth. The average property price in Wales is £186,200, compared to £245,200 in the UK. Changing working styles post-pandemic, as well as local economic conditions and property types, all play a role in the wide range of price increases seen across the country.
How has the pandemic affected affordability?
There is a widespread of affordability across the country. The average house price in London is roughly 11 times the average income. In comparison, the average property price in the North of England is 5.1 times higher than average wages. This helps to explain the current price growth trends, with Wales being one of the more affordable markets despite recent price increases. Affordability levels in London have also improved due to modest price increases.
Mortgaging costs are also a factor for many buyers when it comes to affordability. Rising interest rates have created some demand among buyers wanting to lock in a mortgage rate before further interest rate increases. Plus, policy setters are debating loosening stress testing rules for lenders and new borrowers, which could make it easier for potential buyers to gain financing, particularly as the cost-of-living rises.
All these factors indicate that potential sellers, particularly those selling family homes, currently have a ‘window’ of strong buyer demand.
Buyer demand creates ideal selling conditions
Buyer demand soared at the start of this year; mirroring levels seen during the stamp duty holiday in 2021. The continuing of pandemic borne trends such as people reassessing their homebuying priorities has further fueled this demand. Furthermore, huge increases in property values have motivated some sellers to lock in their gains and sell.
Demand has remained abnormally high throughout 2022 and is 65% higher than the average level of demand over the last five years. *
Currently, demand is being driven by two factors. The first is the continued high demand for family homes, with three-bedroom homes being more than twice as popular as they usually are at this time of year.
Overall
This increase in demand has meant that the market’s activity has been consistent throughout Q1. The average time between listing and agreeing on a sale is 29 days, which is significantly less than the time it took to sell even at the start of the year.
The current window of strong buyer demand will lead to increased market activity. The UK property market is signaling a return to pre-pandemic transaction levels, with 1.2 million transactions expected this year, according to Zoopla. *
If you’re looking to take advantage of the fast-growing market, book a valuation with your local Parkers branch.
*According to recent data from Zoopla
