February Property Market Report
New year, new-look property market? With January complete, signs are emerging of what the buying, selling and lettings trends will be in 2023. Zoopla is first out the blocks, with news on asking prices versus paid for prices.
The portal said that at the end of 2022, the gap between what a seller was requesting and the price the buyer eventually paid sat between 3% and 4%. It comments, however, that the gap may not grow as we move through 2023.
Asking prices expected to shift
This is because it expects sellers to start adjusting their asking prices downwards, to fall more in line with what buyers are willing to pay. Tellingly, Zoopla refers to active buyers, despite forecasts in 2022, the property market has not capitulated.
Demand is back to pre-Covid levels
When looking at enquiry levels, demand for homes rebounded in January. When discounting the extraordinary pandemic years, interest is actually back to pre-Covid levels. For context, Zoopla says enquiry levels in January 2023 were 10% above what was noted in 2019.
What has changed is the type of property purchasers are pursuing. Flats are back in fashion, with buyers requiring modest entry points to the market. Zoopla’s data revealed 27% of new buyers are looking for one- and two-bedroom flats – up from 22% in 2022. Conversely, demand for three-bedroom houses has diminished by 5%.
The choice of available homes also altered at the start of 2023. The portal says there’s now an average of 23 homes for sale per estate agent – up from 14 homes in early 2022. Zoopla’s figures follow Propertymark’s latest report. It found there was a 74% increase in homes for sale at the end of 2022, when compared to 12 months previous.
An increase in stock comes at the same time as a more affordable mortgage market. When looking back at the peak mortgage rates in October 2022, Octane Capital found the cost of borrowing using a typical repayment mortgage dropped 14% in January 2023. Those taking out an interest-only mortgage also found their home loan became 24.5% cheaper.
Buyers may have enjoyed increased confidence in January due to reducing mortgage rates but there was also positivity in lettings. New market analysis from Landbay found 42% of landlords taking part in its survey intended to expand their investment portfolio in the next 12 months. Additionally, 79% of landlords didn’t have plans to sell any of their existing properties.
Landlord yields remain strong
Landlords also started 2023 with some impressive yield figures to digest. Data released by Fleet Mortgages showed rental yields across England and Wales had seen annual and quarterly increase towards the end of 2022. Yields had increased from 5.4% in Q3 2022 to 6.2%.
Despite higher remortgaging costs, the lender forecasts continuing strong yields moving through 2023 due to sustained demand from tenants and a continuing lack of available properties to rent. The good news isn’t exclusively reserved for landlords, either.
The cost of renting stabilises
For the first time in months, runaway rents look to be tamed. HomeLet’s January Rental Index detailed that the average UK rent dropped 0.2% between December 2022 and January 2023. The new average cost to rent a property is £1,172 per calendar month.
It’s worth noting that rents in Scotland may affect future rental prices indexes. Temporary measures to freeze rents north of the border were due to end on 31st March 2023. Scottish ministers have, however, announced the legislation that prohibits landlords from raising the rent more than 3% will run for a further six months from 1st April. In limited circumstances private landlords can apply to raise the rent by 6%.
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