22 Aug First House Price Drop Of 2022 – Down To Holidays, Not Rising Interest Rates | Hardisty & Co
According to the latest data from Rightmove’s Housing Price Index, the average price of property coming to the market has seen its first fall this year, down 1.3% to £365,173 (-£4,795).
The Yorkshire & Humber region specifically has shown a month-on-month price decrease of 0.9 % with a year-on-year increase of 9.9%, with data showing an average time to sell period of 33 days.
Before the doom and gloom starts and people hail the beginning of a crash, it is well worth looking at August House price index figures in the past. If we do so, for the last 10 years in fact, house prices have dropped every August to the tune of…1.3%! So, in fact, these figures are exactly what we have seen for the last 10 years. The market has been stampeded by pent up demand for the last 2 years and is now starting to see signs of returning to normality and the usual seasonal trends. With regards to supply & demand, there remains a large imbalance.
Whilst demand is slightly softening and supply is starting to improve, we again must not infer large conclusions from mere month to month data. If we look further back, buyer enquiries are down 4% on August 2021 BUT are 19% higher than August 2019. A similar story plays out with regards to properties coming to market. New instructions are up by 12% on August 2021 but are 6% down on August 2019 and actual total available stock is 39% down on August 2019 – these factors combined provide a market where serious sellers and buyers are coming out on top.
The sixth consecutive interest rate rise, this time by 0.5% to 1.75%, will no doubt be in the minds of many would-be home-movers. Together with the rising cost of living, it will lead to re-considerations of what they can afford to borrow and repay each month.
A combination of rising house prices and interest rates means that average monthly mortgage payments for new first-time buyers putting down a 10% deposit have now exceeded £1,000 for the first time, to reach £1,032. This is 27% higher than at the start of the year.
However, again we must look to historical data to take these figures into context. Despite this challenge, demand for properties in the typical first-time buyer sector is 32% higher than at this time in 2019. So whilst the numbers look daunting, buyer appetite is still there, 1/3 higher than the last most recent comparable time period.
With regards to the rental market, rents grew 12.0% in the 12 months to June across the UK, according to Zoopla. This is almost six times the pre-pandemic average rate of annual growth recorded since 2012. After a brief slow-down, the rate of growth picked up again at a national level. Buy-to-Let landlords are capitalising on the strength of the rental market, with 36% more loans granted in May than the pre-pandemic average for the month.
August and September always historical vie for busiest month of the year and August 2022 looks to be the busiest of the year. With strong demand and available properties still in short supply, renters are facing increasing pressure to secure properties before the start of the new academic and employment year.
For a more detailed conversation about the property market or your requirements, please feel free to contact us to discuss how we can help.