Property and Market Highlights

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October 2023 Market Update

As we approach the end of 2023, the October 2023 Market Update unveils a tale of diverging paths within the UK property market. Despite the hurdles faced by property values, the rental sector experiences a vibrant upsurge. Let’s delve into the latest happenings and valuable insights shaping the British real estate scenario.

Struggles in Property Values Persist

Amidst high mortgage rates and an unyielding cost of living crisis, UK property values are declining. The Nationwide House Price Index shows a notable 5.3% year-on-year decrease in the average UK house price, with drops in every region.

The Bank of England’s persistent interest rate hikes have cast a shadow on the mortgage market, dissuading potential buyers due to the soaring rates. Consequently, the housing market grapples with a dwindling buyer count and a subsequent decline in property prices.

Robert Gardner, Nationwide’s chief economist, notes that the subdued situation is unsurprising due to the challenging housing affordability. For example, an individual with an average income plans to purchase a typical first-time buyer home. They would allocate a substantial 38% of their take-home pay for the monthly mortgage. This allocation notably exceeds the long-run average of 29%.

Uncertain Times for Mortgage Rates

Despite the Bank of England’s recent unexpected halt in the base interest rate, speculation lingers regarding the potential ripple effect on long-term interest rates and the subsequent relief it might offer in mortgage rates. Only time will unravel the repercussions of this unexpected pause in the days ahead.

Meanwhile, the allure of UK off-plan property continues to grow exponentially. Investing in off-plan properties at present ensures the advantage of securing a competitive price and evading the brunt of impending mortgage rate hikes, presenting an enticing proposition for potential investors and homeowners alike.

October 2023 Market Update: Flourishing Rental Market Dynamics

Conversely, the UK’s rental market unveils a different narrative, brimming with fervent growth that exhibits no signs of deceleration. The most recent Quarterly Rental Tracker from Rightmove illuminates a staggering 15-month consecutive upsurge in the average UK rent. This surge has pushed rents outside London to a notable 10% year-on-year increase, amounting to a total of £1,278 per calendar month (pcm). Within the capital, rents have skyrocketed by 12.1% year-on-year, settling at an average of £2,627 pcm.

The escalating demand is palpable, with enquiries per property soaring threefold to 25 since 2019. Moreover, the statistics reveal a 41% increase in tenants scouting for new accommodations, contrasted by a 35% reduction in available properties, underscoring the supply-demand imbalance.

Although new rental properties entering the market increased by 7% over the last year, this surge in supply hasn’t matched the growing demand. Consequently, this situation has perpetuated the upward trajectory of rental prices.

Optimal Investment Avenues and Emerging Trends

Analysing the rental landscape, Zoopla emphasizes the remarkable performance of major regional cities such as Manchester and Birmingham. These cities are poised for sustained growth, offering promising prospects for investors and landlords in the foreseeable future.

Zoopla’s insights forecast the rental growth to culminate this year at nearly 150% of wage growth. In fact, with projections pointing to a continued surge in 2024. Anticipations suggest an additional 5-6% hike in the average UK rental rates next year. In fact, with regional cities likely to witness even more substantial increments.

Given the changing dynamics, landlords should concentrate on larger two- or three-bedroom properties. These properties reflect the increasing trend of co-habitation resulting from rising living costs. Investing in such properties within busy city centres can be a wise approach to expand one’s portfolio in line with the shifting trends of the rental market.

Interested in learning more about the UK property market and exploring our latest off-plan property opportunities? Connect with the Red Cardinal team today by clicking here.

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