Home.co.uk's Asking Price Index for November has revealed that there was a 0.6% decline in prices during October, with the total stock of unsold properties on the market also falling, reflecting the usual trends seen at this time of year.
Overall, despite higher borrowing costs, the current market continues to indicate clear similarities to that of pre-COVID years 2018 and 2019 in terms of price movements and stock levels, although lower Typical Time on Market for unsold property and tighter supply suggests a somewhat more robust marketplace and therefore greater price support.
However, drilling down into the data, regional Typical Time on Market figures show a key difference to these pre-COVID years, in that it is the northern English regions, Wales and Scotland that have retained much of their momentum after the COVID boom.
Remarkably, these vigorous markets remain positive year-on-year in terms of pricing and, without their support, the national figures would look much worse.
The strength of the rental market remains a key factor in supporting the sales market. High demand has meant letting is both a profitable and speedy alternative to selling, while the high cost of renting supports demand from homebuyers and investors alike.
Across the UK, rents are 49% higher than they were five years ago, and supply remains tight in most regions. However, the current surge in supply (up by 46% vs. October 2022) in the Greater London region is the first significant sign of weakness.
Indeed, asking rents are now falling in the more central boroughs. This market correction is occurring in the wake of the massive hikes observed in the latter half of 2022.
The total stock level of unsold property fell significantly during October as predicted. This seasonal fall tends to confirm that, following a period of restocking of agents' portfolios, the market has reverted to a more recognisable state after the severe depletion of stock brought about by government intervention and rock bottom interest rates, both of which were a result of COVID economic countermeasures.
Supply of new instructions has also reduced (by 3% vs. October 2022 and 8% vs. 2018), indicating that the market is unlikely to be flooded with distressed sales in the near term.
Rents are still rising outside of the London market, albeit more slowly, as affordability constraints appear to have been reached in several regions.
However, hotspots such as Scotland and the North East are still indicating 18.0% and 11.1% growth year-on-year. The South East has also been hiking rents rapidly (+10.6% annualised) which may be due to demand from renters priced out of the London market, although during the last three months, they have edged down 3.7%.
Overall, the mix-adjusted average annualised rise for the UK has dropped from 9.7% last month to 6.1% this month.
The annualised mix-adjusted average asking price growth across England and Wales is now at -1.6%; in November 2022, the annualised rate of increase of home prices was 3.6%.
