Housing Market Update February 2023
You may be hearing lots of negativity in the media about house prices, so we feel it is only fair that we give you our experience of the market so far for 2023. Here at Dawsons, we feel transparency is important, so we’d like to share with you a report on what we are seeing, along with research and insight from Zoopla’s UK House Price Index*
How has 2023 started, and where are we heading within Residential Lettings, South Wales and our geographical range here at Dawsons….
There was a relatively mixed overview for January with the sector as a whole, although our statistics do break with trends, doing so positively for both landlords and prospective contract holders. Whilst rents appear to be holding at pre-Christmas numbers in some areas, we have found at a local level and within our services slight increases, and continued high demand. Contrary to a number of regions across the UK and voids noticeably increasing, we have found the very short period of time properties remain vacant before the first new tenancy, or in between tenancies remaining the case.
The cost of rent for a property as an average rose fractionally between December and January, with a small increase keeping rents in the main at the recent highs. This reflects rent being between 8% and 10% higher than the same time as last year.
During January, prices in most regions held steady compared to the previous month. The biggest shifts were seen in the East Midlands, and the Northeast, where costs dropped.
Despite the ongoing demand for rental properties keeping prices buoyant, January recorded a notable increase in void periods across England and some areas of Wales. The number of void days per property in England rose from 20 to 23 - a rise of 15%. This is the highest void figure in some records since Q2 of 2021, however this does follow 6 months of slowly increasing void numbers. Breaking this trend, statistics for Dawsons show continued low void periods, reflecting those of 2022, with little sign of a change in this due to the imbalance of property supply and demand.
What’s happened in the property Sales market?
The reality is that house price growth stalled towards the end of 2022, in response to the drop in buyer demand in the final months. At the end of 2022, UK house price inflation had slowed - a trend matched across all regions except London. Most areas recorded small price falls at the end of 2022, as buyers negotiated harder on price, however the gap between asking and achieved prices is now holding at 3% to 4% and UK house price index show there is no sign of this worsening right now. Zoopla are predicting additional (but modest) price reductions are likely over the first part of 2023 as sellers continue to adjust asking prices in line with what buyers are prepared to pay.
Our experience is that home-sellers and buyers are taking a step back and adjusting to what many are calling the new “normal”. The normalising of the property market was bound to happen at some point as we could not expect the historically extremely low interest rates to last forever! Mortgage rates for new business are now generally below 5% and look set to remain in the 4 to 5% range in 2023. This is a much better prospect than the 6% to 6.5% levels at the end of last year! In real terms, we do tend to fair better here in Swansea & Llanelli as it is still a “go to” area for many- given the perfect balance of urban, rural and coastal lifestyle, which so many are now seeking!
Demand rebounds in line with pre-pandemic years
Demand for homes has rebounded in the first few weeks of 2023 and Zoopla’s recent data has seen current buyer interest is in line with the pre-pandemic years and 10% ahead of 2019. This is not surprising as the last three years have been exceptional with the pandemic reshaping how households think about housing, driving more moves. On a regional basis, demand and sales agreed are holding up in Wales, compared to some other regions - South East, South West and the East Midlands, where prices are much higher or have grown rapidly over the last 2 years, therefore exacerbating affordability pressures. We have noted a 27% increase in new buyers registered, 38% increase in properties under offer for Jan 2023 vs Jan 2022, and the number of new instructions is fairly consistent with last year, and so, not nearly as awful as the media predicted!
Early 2023 buyers shifting preferences towards flats
Interestingly, one clear trend from the first few weeks of 2023 is that buyers are becoming a little more value-conscious in response to the hit to buying power from higher mortgage rates. Zoopla has reported a clear shift in demand towards flats, data reveals that 27% of new buyers are looking for 1- and 2-bed flats, up from 22% a year ago - a trend reported across all areas of the UK in the first few weeks of this year.
Outlook
As the outlook becomes clearer after Easter, we believe that demand is likely to pick up further. The other notable change in recent months has been a continued growth in the number of homes for sale. Let’s not forget that the scarcity of supply has been a key feature of the market in 2022, and this added to the upward continued pressure on home values. This is now reversing, although the number of homes for sale remains 6% below the 5-year average. There is now an average of 23 homes for sale per estate agent, up from a low of just 14 homes in early 2022*. This higher supply boosts choice for “would-be buyers” and will also act to reduce the upward pressure on home prices. A key consideration for anyone looking to sell in 2023 is to make sure their home is competitively priced and in line with what buyers are prepared to spend in the local market. In this regard, we should remember that since the start of the pandemic house prices in this area have increased by circa 20% and so we are, therefore, still in a positive position. We should also remember that even if we are selling at 5% less – we should almost certainly be buying at 5% less too! Here at Dawsons, we take immense pride in being a multi award-winning, reputable, and respected agency with a long-standing history and affiliation within Swansea and our local communities. Our sales and lettings teams provide unrivalled knowledge of the local property scene and our market intelligence is second to none to ensure you receive up to the minute advice on the marketing of your property.
The past twelve months has, once again, proved how resilient the property market is here in the UK, particularly here in South-West Wales, an area which is still in the top places to live in Wales and the market is in better shape to deal with any further headwinds than in previous economic cycles.
If you would like any further information or no obligation advice, contact Cat Sollis (Senior Digital Operations Manager) for further information on 01792 362031 or email cat.sollis@dawsonsproperty.co.uk.
Like our blogs? Read January’s review here
NB: If your house is presently on the open market, please do check your agency agreement to ensure that you are free and able to list your property with another agency and that you are not tied to a contract.
*Zoopla’s January 2023 | UK House Price Index