What’s happened in the UK property market: August 2023
We report on some of the headlines that have affected the property market during August, but it is not as bad as some commentators will make you believe.
Interest Rates
It’s was bad news for homeowners as the Bank of England has raised the base interest rate for a 14th consecutive time to a 15-year high of 5.25%.
The increase will directly affect homeowners with variable and tracker mortgages, meaning an increased monthly payment.
The next interest rate announcement will be made on the 21st September, when many economists expect another increase to 5.5% – a figure they’re predicting will remain in place for the next 12 months.
Asking prices for UK homes fall
August saw its sharpest drop in asking prices for five years. This is a sign that the property market is continuing to slow.
The average asking price for a property new to the market is now £364,895. That’s 1.9% less than the previous in July, and £7,012 less in monetary terms.
While August is traditionally a slower month for property sales, the drop off is more than double the usual 0.9% fall in prices that are typical during the summer.
It’s not all bad news for sellers though. Average house prices remain 20% higher than they were this time four years ago.
Mortgage rates cut
In some welcome news for buyers and homeowners whose mortgages are coming up for renewal, the ‘big six’ lenders have continued to cut their mortgage rates since July’s peak.
According to property website Rightmove, the average five-year fixed rate deal is now 5.81%, down from 6.08% last month.
Renting is now cheaper than First-Time mortgages
In other property market news, figures released by property website Zoopla have revealed that monthly rents are now cheaper than first-time mortgages. These statistics haven’t been seen since 2010!
An increase in mortgage rates has seen interest soar to more than 6% in recent months, and according to Zoopla’s data, the average monthly mortgage payment for a first-time buyer with a 15% deposit now stands at £1,285. As for renters, their average monthly payment is £1,163. A difference of £122 per month or £1464 per year.
London and the South East are the worst affected areas. In fact, in the capital, average rents are £493 per month less than average mortgage payments – significantly less than the national difference.
Some areas of the UK buck the trend, including Wales, Scotland and Northern Ireland, but renting is currently the cheaper option for most of England.
More than 4 In 10 adults have given up on owning a property
In a survey of more than 2,000 adults aged 18-39, sadly 42% have given up on the idea of buying a property in the next ten years.
The survey, commissioned by property website Zoopla, also revealed that a significant number of people earning more than £60,000 per year have also given up on owning a property in the next decade, with 38% feeling that it’s beyond reach.
The three main reasons for being unable to purchase a property were
Of the 14% of people who are planning to buy or who are in the process of buying, 85% of them have made financial sacrifices to do so. Typically, 34% have given up holidays and 30% have sacrificed socialising.
The figures also revealed that 69% of those who are planning to buy or who are in the process of buying have made compromises on the property. Compromises include buying in an alternative area to the one they prefer, purchasing a smaller property than they planned, and choosing a property in need of refurbishment or renovation.
Any neutral observer could be forgiven for thinking it is all doom and gloom, but it isn’t. As always it is always best to speak to people like us who actually work on a day-to-day basis in the property market. For example, here at Livermores in Dartford and Crayford, we actually put more properties on the market and agreed more sales in August compared to the same month in 2022. This shows that whatever happens to interest rates, the stock market, inflation and the economy in general, people still need to buy and sell properties whatever the headlines.
For a more positive outlook on the local property market property and a more detailed overview of the Dartford and Crayford area, please get in touch with Livermores The Estate Agents. We are your local property experts. Call us on 01322228090 or 01322 550777 or email dartford@livermores.co.uk or crayford@livermores.co.uk.