Housing Market Update March 2023

What’s happening in the sales market?

According to Zoopla’s latest House Price Index report*, annual house price inflation slows to 5.3% down from 8.6% last year. Our data shows demand from home buyers has rebounded in the first two months of 2023, where we have noted a 20% increase in new buyers registered with Dawsons, showing us that buyer confidence is there.

New sales volumes in early 2023 have also recovered where we have noted the number of new sales year to date is actually just under 12% higher than that of the same time period in 2022.

Supply returns to ‘normal levels’, boosting choice

We have noted a 5.7% increase in new listings year to date, compared with the same time period last year. This creates more choice for home buyers and also helps reduce the upward pressure on house 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. 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.

In residential lettings we have noted further reassurance that belp buck more national trends with gains for both new properties to market, and the numbers of prospective new landlords looking toward starting their journeys within BTL or lettings in general. Some increases nearing 9% that is helping support the increasing demand from tenants.

Landlords and therefore properties that are exiting the market and therefore reducing the supply further, are lower than had been anticipated and with some key geographical areas and several active postcodes seeing zero properties move to sale or leave the lettings sector as a whole.

Prices

While sales volumes have recovered, sellers are having to accept some discounts to the asking price to secure sales. Let’s not forget that negotiating down from the asking price was normal practice before the pandemic boom! The latest data from valuation and risk business Hometrack shows that the discount to achieve a sale has increased over the last 5 months and currently stands at 4.5% - an average £14,100 discount per sale. Although discounts to asking price are larger than in the pre-pandemic years, this reflects the rapid transition from a hot sellers' market - where many buyers had to pay over the asking price over much of 2021 and 2022 - to a buyers' market! Putting this discount into context, the average UK home grew in value by £42,000 over the pandemic!

In terms of prices, 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! 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!

For landlords and therefore effecting current and prospective tenants, rents PCM reflect the increased cost of borrowing. Interest rates have shifted from the long time very low figures in an attempt to reduce inflation. While rates are still relatively low when compared to figures seen in previous decades, there are more noticeable effects this time around. The high cost of being a landlord and of BTL are both now effected in terms of initial outlay, but through increased costs and requirements thereafter. Many incomes are being squeezed, meaning those hoping to take their first steps onto the property ladder are having to rethink, putting further pressure on the number of tenants and reduced supply of properties `to let`.

As a result of what has already been noted above in terms of sale prices, figures and volumes, those in the rental business may well find that any caution caused by concerns over te likes of interest rates, works in their favour, boosting demand as home buyers wait to see what’s going to happen.

Outlook

The housing market is adjusting to higher mortgage rates better than many had feared and it’s welcome news to see more rates for new buyers now in the 4-5% range and even lower. Mortgage rates are unlikely to get much cheaper but competition among lenders will remain strong and keep deals attractive for borrowers. All this points to optimism in 2023 as the impetus to move remains. Working from home, increased retirement all continue to stimulate demand to move home. If the market continues as it started this year, then it will be a positive result.

For landlords and tenants, the property market through supply and demand continue in the main along the theme of recent months. The demand remains very high and is in the majority of cases increasing – 2023 is continuing to be a challenging year for tenants with high rents, and for landords who look to adjust to new conditions, requirements and legislation. With higher rents, higher interest rates, and the growing cost of mortgages, lettings is likely to see some continued instability through spring and summer, with a gradual stabilising thereafter of increased supply to support demand.

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 February’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 February 2023 | UK House Price Index