January Property Market Analysis

Historically speaking, the property market is cyclical with familiar, repeating patterns – and moving into an anticipated new phase was particularly evident in December. While there was a traditional and circumstantial pause in the sales market – thanks to Christmas and a recovering mortgage market – the lettings sector powered ahead.

Even in sales, there was a shift in dynamics. The end of 2022 saw us move firmly into a buyers’ market, with more homes for sale and tempered asking prices. Here’s where the ebb and flow leaves us as we enter 2023.

What’s gone up?

Sale stock is slowly improving. Figures released by Propertymark revealed the average number of homes for sale per members’ branch is now 33. This has risen from 30 and is creeping upwards towards the pre-pandemic average of 38 per branch (an average noted between 2015 and 2019). 

Number of mortgage products rise

The mortgage market ended the year firmly in a recovery phase. As well as improving mortgage rates (more on that later), there is more choice. As of December 2022, borrowers had access to around 4,000 mortgage deals. This was up significantly from the autumn, when the Mini Budget caused product numbers to plummet to 2,560. 

Rents have continued their upward trajectory too. The latest HomeLet Rental Index found that rents across the UK ended 2022 on a more expensive note. A new average rent of £1,175 is 0.3% more expensive than seen in the previous four week period.

This latest rent rise caps a year of ever-increasing rents in the UK. Research by Ocasa found the average rent price increased by 10.8% between Christmas 2021 and Christmas 2022. This was a jump from £1,060 per month to £1,175.

Staying with lettings, Scottish buy-to-let purchasers will notice their tax bill has gone up. On 16th December 2022, the Additional Dwelling Supplement – a tax on second homes that is part of Land and Buildings Transaction Tax – rose. The new rate is 6% – up from 4%. 

So what’s falling? With the pandemic’s property frenzy over, normality resumes and prices are beginning to adjust. Figures from Rightmove showed that in December, the average price of a property coming to market fell by 2.1% – that’s £7,862 less.  

Still 7 buyers for every property

News from Propertymark also suggests that the unsustainable sales market seen in Covid times has fizzled out – but demand hasn’t totally disappeared. While earlier in 2022 there were 11 buyers for every new property coming to market, this number has fallen. According to its report released in December, Propertymark’s members said they had seven buyers per property at each of their branches. 

Sometimes figures rise and fall at the same time, and this can be said of future rental values. Zoopla’s rental market forecast for 2023 suggests the cost of renting a property will continue to go up. The portal does say that the rate at which rental values will increase is due to come down. To illustrate – rents rose by an average of 12% in 2022, while they’re expected to rise by 5% in 2023.

Fixed-rate mortgage costs fall

Although the Bank of England used its December announcement to raise the interest rate to 3.5%, it didn’t have an effect on new fixed-rate mortgages. In fact, the cost of taking out a fixed-rate mortgage fell at the end of 2022. When compared to rates in October, the month of December offered cheaper borrowing.

According to a report in Forbes Advisor, the average cost of two, three- and five-year fixed rate mortgage deals across all deposit levels fell in December. Rates at 5.30%, 5.28% and 5.03%, respectively, compared favourably to highs of more than 6.50% in October. The most competitive fixed-rate mortgages are now under 4.7%.

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