On 25 February the Guild of Property Professionals published its latest market report including an in-depth look at the market in our region.
A year like no other
2020, a year in which the housing market defied expectations. At 7.6%, annual price growth across the UK is at its strongest since the summer of 2016. Over 129,000 homes are believed to have changed hands in December, 32% more than in December 2019 with sales for the year projected to be just 11% lower than in 2019 (HMRC). The mortgage market has recovered. Approvals in 2020 were up 3.7% on the previous year (Bank of England) and with an estimated 9%–10% more sales agreed in 2020 than in 2019, the start of 2021 has been positive.
Supply demand imbalance
The third national lockdown has exacerbated the supply demand imbalance evident across the housing market since the autumn. Rightmove reported its busiest ever start to a year, with demand up 12% and sales agreed in January up 9% year on year. However, new supply to the market has fallen by 12% and the number of homes for sale by 6% as new sellers remain cautious while restrictions remain (Zoopla).
Economic backdrop
Activity in the market is set against a backdrop of continued economic and consumer uncertainty. The UK economy shrank by a record 9.9% over 2020, despite growth of 1.2% in December. Although consumer spending fell sharply in January as restrictions were tightened, the vaccination rollout is on target and there is some optimism that restrictions may start to ease in the near future. The Chancellor’s Budget on 3 March will set the tone for the year ahead, the economy currently forecast to return to pre-pandemic levels during the final quarter of 2022 (OBR).
Rental market
Average rents across the UK rose by 1.4% in the year to December, on par with growth throughout the year. Agents in virtually all parts of the country envisage rents rising over the near term, London the notable exception as supply continues to considerably outweigh demand (RICS). As in the sales market, interest in rental property out of city centres has surged. However, the majority of renters move less than five miles between tenancies.
In our region
At 4.8%, average annual price growth in the East of England is lower than the UK average. But, growth is currently stronger than at any point since January 2018 and considerably higher than the 1.5% fall recorded this time a year ago. Price growth across five areas currently exceeds 7.5%. Rightmove report average asking prices fell by just 0.1% month on month across the region in January, with properties selling more quickly than a year ago.
Annual price growth has strengthened across the UK in recent months
Most active housing markets across the region
At £302,624 the average price of a property in the East of England is £13,700 more expensive than a year ago and activity across the market is robust. On average 3.6% of private properties are sold each year, with turnover in three areas 4% or more. Over 14,400 new homes were registered for sale during 2020, and nationally registrations have been on an upward trend since September.
First-time buyers were particularly affected by the closed housing market and the stricter mortgage lending that followed. However, buyer numbers have recovered steadily, with transactions just 2% lower year on year during the final six months of 2020 (UK Finance). The number of High Loan-to-Value (LTV) mortgage products has also increased, Moneyfacts reporting there were 169 products available at 90% LTV in January, over double the number available back in July. Lending rates remain low, the average mortgage rate the lowest in history.
