General » Blue Bricks Magazine

28 May 2023

Property Market Picking Up Nicely

More properties are coming on the market for sale with agents reporting an increase in supply. At the same time the countryside and ‘quieter living’ is still proving popular for buyers. Meanwhile, more people are looking to rent.

The estate agents’ professional body PropertyMark showed in its recent Housing Insight Report that there were 70 per cent more homes for sale in April than the same period last year. It brought the average amount of stock available per branch to 34. That’s a big increase of 14 properties more than in April 2022.

At the same time, the property market is once again similar to pre-pandemic figures in terms of sales, with an average of eight properties sold per branch. The majority of homes – around 75 per cent – are selling at sums below the asking price.

‘Escape to the countryside’ still going strong

Meanwhile, lockdowns may be over but the rush to the countryside is far from nearing its end. Hybrid working has meant many house buyers are still looking for quieter spots in which to reside. And they want bigger homes too.

At least that’s the findings from the latest Halifax report which says detached homes are by far the most popular category for today’s buyers. To the extent we’re buying seven per cent more than we were a decade ago. That’s a rise from 25 per cent to 32 per cent.

Analysts believe many older people who have built up large amounts of equity in their homes are downsizing. The reason for this is to help children and grandchildren get on the property ladder themselves.

The loser in the property stakes is terraced homes, which have fallen from 26 per cent popularity to 21 per cent over the same period. More of these are now being snapped up by first-time buyers.

At present, the number of detached homes in England and Wales – 4.21 million – makes up 16 per cent of all available homes. That compares to 6.93 million terraced houses (26 per cent) and 1.10 million flats (23 per cent).

More renters than property available

The number of people looking to rent in April was 24 per cent higher than the same time last year, the same Propertymark report we mentioned earlier showed. That worked out at around 118 prospective tenants registered per agency branch. And yet, there are only around nine properties to rent per agency. Despite this, the average rent is 75 per cent less than in April 2022.

Propertymark CEO Nathan Emerson said: “We are still seeing the demand for property grow but no increase in homes. This means that pressure on rent prices is remaining, whilst new legislation will undoubtedly have a knock-on effect, we desperately need more homes for renters.”

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Jill Stevenson

General, Market Pulse

12 May 2023

Buyers Want Smaller Homes and Eco-Builds

House prices are teetering on the edge of a fall, while the cost of a mortgage in the UK is increasing.

The most recent figures from the Halifax show property price increases are flatlining; April’s increase for the average property was a mere 0.1 per cent compared to the same time in 2022. And, with the rapid rise of inflation in comparison, it means prices are, in reality, much lower.

Cost of New Builds up 3.5 per cent

Looking at individual sectors, the cost of a New Build has actually risen over the past 12 months, by 3.5 per cent. Another positive figure is for property in the West Midlands, which has seen a jump of 3.1 per cent.

Yesterday’s rise in interest rates, by 0.25 per cent, bringing the figure to 4.5 per cent, is exacerbating the issue of falling property costs. That’s because higher interest rates make buying less palatable. At the same time re-mortgaging becomes far more expensive.

This is evidenced by the recent RICS survey which showed estate agents have more properties on their books. The average estate agent had 36 homes in April, compared to 35 for the previous two months. The reason being less buyer demand.

Buyers looking for smaller homes

A squeezing of household finances has also led to a trend in people looking for smaller homes (ie with one bedroom less than in the past). Energy efficient New Builds are also featuring highly on buyers’ ‘want lists.’

Simon Rubinsohn, RICS chief economist, said: “Buyer demand still appears to be subdued in the face of relatively high borrowing costs… and ongoing affordability challenges.”

Although Tom Bill, head of UK residential research at Knight Frank, said he expected prices to fall this year, it wouldn’t be by much. He quoted a figure of around three per cent, saying the market would be buoyed by plenty of employment, large amounts of housing equity and people still sitting on impressive savings they garnered during lockdown.

Stammer to hit foreign buyers

Labour’s Keir Stammer meanwhile threw a spanner into the works of property buying strategies of overseas buyers, this week. He announced that were his party to gain control of government he would impose new restrictions on foreign investors. This includes raising foreign buyer Stamp Duty yet again (it’s currently at two per cent) and curbing the number of properties they can buy on a development.

Stammer says he also wants to give priority to first-time buyers. He would achieve this, he said, by allowing them a ‘buyers window’ for up to six months (or a time agreed by individual local authorities). In other words, only first-time buyers would be allowed to purchase for a set time.

Rishi Sunak has already been criticised by some of his party for dropping national house-building targets – especially in light of the poor Conservative election results last week.

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Jill Stevenson

General, Market Pulse

26 April 2023

First-time Buyers Face Uphill Struggle

UK property prices are on the rise again – albeit on a monthly basis and by just 0.2 per cent.

The increase was from March to April, reports Rightmove. And, although positive for homeowners, is still 1.7 per cent lower than in the same period last year. The cost of the average property overall in the UK is now around £366,247.

It’s all about competitive pricing for spring, insists Rightmove’s Tim Bannister.

The property portal director said: “Many sellers have transitioned out of the frenzied multi-bid market mindset of recent years and understand the new need to tempt spring buyers with a competitive price.”

The pace of the property market, he says, is similar to that pre-pandemic. In fact, sales were 18 per cent lower than in spring 2022.

First-time buyers face price hikes

Meanwhile, one sector of the property market where prices aren’t particularly competitive, is the first-time buyer market. That’s because the price of one to two-bedroom properties has jumped two per cent compared to spring last year. It brings the asking price for the average first-time buyer home (ie those with one and two bedrooms) to £224,963.

Conversely, sales for ‘second stepper’ homes ie those with three to four bedrooms and a garden and four per cent less their pre-pandemic figure.

City living is becoming appealing again

And talking of lockdown, now that more people are going back into the office, the yearning for city living is becoming ‘a thing’ once again. Property researchers TwentyCi say sales in cities, particularly inner London, are on the rise. In fact, it’s 5.8 per cent more than in 2019. The prices are rising due to investment from foreign buyers.

Meanwhile, London lettings and estate agent Benham and Reeves has identified a gap of more than 34 per cent between seller expectations and what buyers are prepared to pay. The average approval price being around £271,098 compared to the seller’s asking price of £363,416. It’s the biggest gap since the market was in full flourish during the height of pandemic in autumn 2020.

North East sees most UK property sales

Most property sales over the last quarter have been in the North East of England (an increase of seven per cent). Scotland was the only other area to experience an increase in sales numbers. The biggest drop in sales was in the East Midlands, at 15.3 per cent. The previously popular South East saw sales drop six per cent.

The North East saw the biggest uplift in agreed sales at seven per cent, while Scotland saw a small increase at 1.4 per cent.

Other regions recorded by TwentyCi reported a decline in sales agreed when compared to 2019, ranging from a drop of six per cent in the South East to a fall of 15.3 per cent in the East Midlands. The figures, a spokesman for TwentyCi said, pointed to a recalibration in the market, rather than an all-round freefall.

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Jill Stevenson

17 April 2023

Use Classes and Permitted Development Rights for Short-Term Lets- What it Means for You

There have been recent grumblings from the government to introduce a use class for short-term lets. This legislation will cover England only, and if it’s put into place, then it means that rent-to-rent and rent-to-serviced accommodation units will have to go through the planning process for approval.

This new change also includes the potential introduction of permitted development rights for the change of use from a dwellinghouse to a short-term let and the potential for change of use rights from a short-term let to a dwelling house. It is likely that this will only apply to properties that are rented out as a short-term let above a certain number of nights in a calendar year.

Although nothing is set in stone at the moment, it is important to know what conversations are being had so that you can prepare your business in advance. There are pros and cons to this change coming into play, and we’ll cover these later in the article.

Why Is This Happening?

It is becoming a matter of concern that the rise of short-term accommodation in certain areas may be having an adverse effect on the availability and affordability of housing for the local population.

The legislation will likely be flexible in less-popular areas where short-term lets are uncommon. At a guess, it will be these areas where permitted development rights are introduced, so full planning permission isn’t required. The government are also discussing what the application fee will be where planning permission is required for new build short-term lets.

When Will This Happen?

Right now, it’s all just speculation. An open conversation on the introduction of a use class and permitted development rights for short-term lets will be happening between the 12th of April 2023 and the 7th of June 2023. You can view the discussion and submit your thoughts on the Gov.uk website here.

After this, a decision will be made, and it is expected that a date will then be given for this use class to be put in place if the government decide to go ahead.

Is it a Bad Thing?

For rent-to-rent and rent-to-SA providers, the new use class will make life more difficult. In short, it’s another hoop that you must jump through, and it might make the idea less enticing to landlords/ letting agents.

On the bright side, it will reduce competition, as the people looking for a ‘get-rich-quick’ scheme will likely be put off by the process. It will hopefully raise standards in the industry and keep more people accountable. If you’re an established business that has been doing this for a while, then you’ll probably have fewer issues going through the process than someone with no experience.

It is both good and bad depending on how you want to look at it. In our opinion, you should expect these changes to take place and prepare your property business for them. Then, even if the government scraps the idea, you haven’t lost anything. But if they do go ahead, you’re ready, and your business won’t come to a grinding halt.

This isn’t certain, but it’s highly likely that the change will only apply to new short-term lets. So, if you already have a portfolio full of them, then your existing investments shouldn’t be affected.

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Sam Cooke

General, Market Pulse

20 March 2023

‘Over-inflated’ Property Prices Lead to Shrinking Market

An increasing number of sellers are withdrawing their properties from the market.

More than one third of sellers removed their property from marketing websites last month – the highest number since September 2020. The reason for the fall is down to buyers offering sums much lower than hoped for by the seller.

The research, by property researchers TwentyCi, shows buyers are hoping to cash in on the slowing down of the property market. This, however, is having a negative effect since it means fewer properties are available to buy and those that are listed, are more likely to retain their price. Overall though, the result, is increasing stagnation in the marketplace.

Analysts are confident that many of these withdrawn properties will come back onto the market in the spring, when the activity is traditionally strongest. The majority of withdrawn properties are in central London where prices are highest. Sellers there tend to be able to afford to ‘wait it out.’

Shrinking market caused by ‘over-inflated’ prices

One reason for sellers withdrawing their properties is that they were merely’ testing out’ the market anyway with an over-inflated price. In other words, they were in no hurry to move. Other genuine sellers are realising they’ve missed the price bonanza and removing property in order to rethink their strategy. Certainly, with mortgage rates expected to fall as the year goes on, there is hope the market with enjoy a revival of buyers.

Figures from the government’s Office for Budget Responsibility, revealed last week, show property prices are expected to fall by around 10 per cent from their peak last year. This is an increase of one per cent greater than was previously predicted.

Poor Ofsted ratings affecting house prices

Meanwhile house sellers who live in the vicinity of a state school with a failing Ofsted record, may be forced to take £20,000 of the price of their property.

The government’s school grading system is having a marked effect on house prices, says a survey by Hamptons estate agents. Their research shows that the price of properties with a catchment area for a school that had been downgraded by just one point (ie from ‘good’ to ‘needs improvement’) were two per cent lower than their nearby equivalents.

A two grade-drop was even more detrimental to sellers, with a five per cent drop in the value of their property. That’s an average of around £20,171.

Around 80 per cent of top rated schools downgraded

The schools Ofsted inspectors graded had all been marked as ‘outstanding’ in 2012. But, a decade later, up to 80 per cent of these education establishments had been downgraded. Four per cent had been re-graded as “inadequate.” In one area – Plymouth with Millbay Academy – house prices fell by 11 per cent last year.

Of course, the converse is true too. A one grade improvement can result in a property price boost of £4,731 (one per cent), while property sellers in an area where a school has received a two-grade boost can expect to sell for, on average, an additional £22,088 (or six per cent).

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Jill Stevenson

General, Market Pulse

28 February 2023

Think Tank Wants Changes to Property Planning Policy

Around 442,000 homes would need to be built annually for the next 25 years in order to relieve the UK’s housing crisis. That’s according to a report by the leading economic think tank for cities and town centres.

The Centre for Cities analysis shows the UK is short of 4.3 million homes. With the government’s promise to build 300,000 homes a year, it would take 50 years to fix. Worst hit is the Greater South East, while in England as a whole a typical house is more than 10 times the average salary.

UK’s housing crisis dates back to post-WW2

The report says Britain’s housing supply problem dates back to 1947 and the introduction of the Town and Country Planning Act. This is contrary to the belief by many that it was the Tory government’s Right to Buy legislation, introduced in the 1980s, that was the main culprit, particularly since council house building was also cut back at the time.

Comparing the UK’s housing history with that of it is continental neighbours, the report points to a drop in house building of more than one third after the introduction of the 1947 Act. It went from a housing growth of two per cent a year up to 1939 and to 1.2 per cent from 1947 to today.

Call for change to current planning system

Changing the discretionary planning system that local authorities currently use, to a new rules-based, flexible zoning system would greatly improve the rate of new house building, insists the organisation.

Andrew Carter, Chief Executive, Centre for Cities said: “UK planning policy has held back the economy for nearly three quarters of a century, stifling growth and exacerbating a housing crisis that has blighted the country for decades.

“Big problems require big solutions and if the Government is to clear its backlog of unbuilt homes, it must first deliver planning reform.”

Sellers reducing property prices by around 4.5 per cent

Meanwhile, for those who do have a property and are looking to sell, be prepared to reduce the asking price by around £14,000. That’s according to property portal Zoopla’s latest report which shows sellers are cutting prices by an average of 4.5 per cent. In London and the South East of England the cut is slightly bigger – at 5.5 per cent.

The reason for this is isn’t just the cooling off of the market, but the fact there are more homes for sale. According to Zoopla most estate agents these days have around 24 properties for sale. That compares to just 15 for the same period last year. As a result, nearly half of sellers (40 per cent) have been forced to lower the price of their property in order to secure a sale.

But, considering the average property rose by just over 20 per cent during the pandemic (resulting in an average gain of more than £48,000), the current cut shouldn’t be particularly hard-going for long-term home owners.

Richard Donnell, executive director of Zoopla says he expects a ‘soft landing’ for the property market this year, with property price falls of no more than five per cent.

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Jill Stevenson

General, Market Pulse

22 February 2023

Barratt Boost While Purple Bricks Up For Sale

As the latest government figures put the average property in England and Wales at £294,329, one of the UK biggest New Build companies reports a rise in reservations.

The UK House Price Index showed an annual price rise of 9.8% in December last year (the latest figures). In England the average property is valued at £315,119. In Wales it is £222,402. In London, the figure sits at £543,099.

At the same time the one-time big online estate agency success story Purple Bricks is itself up for sale.

The biggest annual price rise is in the East Midlands, at 12. 3%. Next highest is the North West with 12.2%. Yorkshire & the Humber is third highest with an increase of 11.8%. The smallest increase was in London at just 6.7%. Both the South West and the East of England were at the bottom of the region table with increases of just 8.9% and 9.9% respectively.

In terms of property type, semi-detached homes increased the most in value over the year, with a jump of 11.5%. Next was detached homes, jumping by 10.7%. Terraced homes were up by 10%, with the lowest annual increase for flats at 7.8 per cent.

The average price of a New Build home in England increased by just over 21% between October 2021 and 2022. That was 9% more than an existing resold property.

Barratt sees jump in New Build sales

Earlier this month UK Housebuilder Barratt optimistically announced an increase in New Build reservations. But they remained cautious for the rest of the year, they revealed, preferring to wait until the spring before making any predictions. If it remained similar to January though, it would result in up to 17,000 New Home completions this year.

The recent rise they put down to more competitive mortgage rates, a lower Bank of England base rate than expected and the news that energy costs are expected to reduce as time goes on.

The construction company reported half-year revenue of £2.8bn from June to December this year. That compared to £2.2bn for the same six-month period last year.

‘Disrupter’ Purple Bricks up for sale

Meanwhile it was once a roaring success story, but now online estate agents Purple Bricks is seeking a buyer of it is own. The company is expected to have made a loss of up to £20m last year following restructuring in it is lettings side and a failed international expansion into Canada, the US and Australia. The difficulties were exacerbated by entrepreneur and chief executive Michael Bruce leaving last year.

No buyer has yet been found for the chain and so far, no-one has come forward to publicly express interest. The company’s shares were once worth £5, but at the moment are sitting at less than 10p.

Investor Lecram Holdings, currently owns 5% of the group. Executives there are said to be pushing for new management at the top of the ailing online sales and lettings agency. More than one quarter – 26% – of the group is owned by Axel Springer.

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Jill Stevenson

21 February 2023

Alasdair Cunningham’s Low Money Down Property Training- An Honest Review

Pack High Expectations for This Low-Money-Down Training

Before I start, I want to clarify that there is no financial endorsement for this review. The views outlined in this write-up are completely unbiased, honest and based on personal experience at a live event.

On the 17th of February, I attended the Low Money Down event held by Alasdair Cunningham, a prolific property trainer with years of experience in the industry. The event was held in Nottingham and is part of the Property Accelerator Package.

The two days cover lead generation and management of low-money-down strategies, like property sourcing, lease options, rent-to-rent and delayed completion.

Here are my honest thoughts on the two-day event, and whether or not I think it is worth your investment.

Getting the Assumptions Out of The Way

I have heard great things about Alasdair from multiple different sources. It’s one of the reasons we picked him for the front cover of our January/February issue. While chatting with Alasdair about his feature over a curry in Leeds, he invited me to his events to try them for myself. He believes in giving evidence, and he wanted to show Blue Bricks just how good he really is.

As someone who has attended training events in the past, I had some preconceived ideas of what to expect. It was almost like a Bingo list. It seems obligatory in this industry that the following must happen when you pay a trainer:

You receive half the training, being upsold onto a “2.0” course.
You’re pressure sold into a ridiculously discounted offer, usually one that ends in 97.
The advice is impractical and relies more on getting you excited than showing you how to get results.

Alasdair took every misconception I had and blew them out of the park within the first few hours. How? Because he actually spoke about these things himself.

He even showed us his marketing funnel and explained that there were no 2.0 courses! Everyone in the room got exactly what they paid for. Before he mentioned any additional training, he forewarned the audience and told them they could go grab a drink if they wanted to rather than hear his pitch. He never hard sold, only explained what was on the table

Finally, all advice given at this event was practical, factful and very real, which is what I’ll touch on next.

Refreshing advice

This event comes with online training. I didn’t partake in this myself, so I can’t comment on it. However, from what I heard from various sources at the event, it’s extremely in-depth.

The online content focuses on the admin side of things, like compliance. The event focuses on practical advice, like lead generation.

As someone with a background in marketing, I’m often frustrated by advice that surrounds the industry. Many of the methods used to find off-market leads are outdated, and often do more harm to your brand than good. So, when Alasdair pointed towards more modern methods, like Google ads, I was pleasantly surprised.

One of the main parts of the event included Alasdair setting up a marketing campaign live on the projector. This included a landing page, which was then linked to Google adverts. He set it all up before our very eyes, and it took around an hour. After demonstrating how cost-effective it was, he ran the ad.

As I said earlier, Alasdair is a big believer in proof. So, the next day, he even shared the results of the campaign with us (a total of 48 leads in 24 hours).

But…he’d made a mistake. He ran the campaign across Europe rather than the UK. How do I know this? Because he told us! He even explained that these 48 leads might be worthless, or they might be golden. It was refreshing honesty.

Another tactic used for marketing was to reach out to companies via certain property portals. This, again, was done live on the screen in front, followed by live calls to landlords who replied as a result of this. Everything was demonstrated, and it all worked.

Mindset is Everything

Mindset is important, but it is often too much of a selling point. Many people pay for pragmatic training, like how to invest in property, and end up with a course that teaches them about the importance of affirmation. Practical advice around facing your fears and overcoming mental blocks has somehow gotten mixed with meditating at six in the morning.

A large part of Alasdair’s event was based on mindset, but not the fluffy part. It was based on real things, like facing your demons and acknowledging that you are your own worst enemy. I can’t spoil what happens, but a part of the event covers “acting in spite of fear”.

What I will say is that the activity we undertook left most people drained of colour when it was mentioned. However, the fear soon subsided, and after it was finished, the atmosphere was like that of England scoring during the world cup! The energy was unbelievable.

Thoughts on Alasdair

Alasdair isn’t scared of offending people with the truth. Everything he says is clear-cut and to the point. He never advertises property as being something easy. He actively says that it takes time and effort if you want to succeed.

If I had to sum him up in one word, I’d say “refreshing”. Why? Because it’s refreshing to see the standard tropes of property training broken.

But one thing that really struck me about Alasdair was how much he cared. He knew the name of every person in the room. He became visibly emotional when one of his students told a success story. He spoke to people during the break and offered free help to anyone who was struggling or had a big decision to make in his life.

I could see that Alasdair is passionate about what he does and is more driven towards getting people results than taking their money. He’s trustworthy, brutally honest, hilarious, and this event made me proud to be working with him.

Who is This Right for, and Would I Recommend It?

Honestly, I think even experienced investors could pick up a few golden nuggets from this event. It was one of the first events I have attended where most of the people I spoke to have a portfolio already. Even people already investing in low-money-down strategies were amazed by the information.

If you are wanting to get involved in property with little time and not too much money, then this event will help you get started. If you have a few properties in your portfolio and are struggling with lead generation, then I also think this event will seriously help your business.

Would I recommend this training? Yes. Here is why:

It’s practical- All the advice given is backed up by evidence. Anyone can act upon it, regardless of age, income or experience. It’s not hollow advice like “find an investor” or “ask your family for money”.
The atmosphere is unbelievable- I have a very short attention span. Yet, the atmosphere at this event meant Alasdair kept my attention for two days straight. It’s not boring classroom learning, it’s like a cross between Wembley and a university degree!
Open and honest- The speakers outright said that you can’t jump straight in with no money and no experience. They shared everything and hid nothing, even telling the audience that they might have to send 100 messages a week for six months if they want to see results.

See for Yourself

If you want a taster session, then Alasdair runs a free day event. It also doubles up as a networking opportunity, as you’ll meet 50 other people who are either involved in property or looking to get started. The day will give you a feel for Alasdair’s training style, and it’s a good way to get involved for no financial cost.

If you’re interested in learning more, then click here and book your space.

Article written and uploaded by Sam Cooke, Editor of Blue Bricks Magazine

Sam Cooke

General, Market Pulse

4 October 2022

Interest Rates Fluctuate as House Prices Remain High

Buy to let investors, first time buyers and private home owners in England and Northern Ireland will make savings from the recent revision to Stamp Duty thresholds.

The increased threshold to £250,000 – up from £125,000 – has been welcomed as a slight boost to the market. First time buyers can look forward to an increased threshold of from £300,000 to £425,000). They can also buy a property up to the value of £625,000 and still claim relief (that’s an increase from £500,000 previously). Unlike his cut to the 45 per cent higher earner’s tax rate (which has subsequently been reversed), the public did welcome this part of the new chancellor Kwasai Kwarteng’s ‘mini budget.’

Buy to let landlords still pay additional three per cent

According to its UK House Price Index report for September, rival portal Zoopla said the cuts would affect 43 per cent of properties on its site (ie the properties would be Stamp Duty-free). Although, of course, buy to let landlords and second home owners in general will still have to pay a three per cent Stamp Duty cost.

After doing some calculations Rightmove executives said around 45 per cent of the houses and flats for sale on their property portal were already exempt from Stamp Duty – even before the increased thresholds were applied.

North of England to benefit most from Stamp Duty changes

Areas where property prices are least expensive, such as the north of England, will benefit most from the cuts since they’ll make the properties more affordable. The north of the country – together with the Midlands – is already enjoying the fruits of relocation. With more jobs moving to Manchester, Leeds, Birmingham and Liverpool, there’s a bigger demand for properties in these busier cities. Buy to let investors were benefiting in particular, thanks to high yields.

Many analysts are predicting a property crash of up to 15 per cent next year as grocery price hikes and the impact of rising energy bills on household finances really take hold. Rising mortgage interest rates will add to the unaffordability of moving home.

Large variations in salary percentages for housing

One recent lender – Nationwide – pointed out that the average UK property works out at almost seven times the cost of the average take-home pay for individuals. That works out at 40 per cent per month of a salary going towards housing costs. Variations are wide though – in the city the figure is around 64 per cent (or 11 times the average take-home pay), whereas in the north of England, housing payments take up just 26 per cent (4.5 per cent) of a salary.

As the markets went in to turmoil this week, lenders withdrew hundreds of mortgage products. The result was many house sales fell through as buyers panicked over rocketing interest rates. After the chancellor’s U-turn on the higher tax earning rate, the panic began to subside and rates fell slightly. What will happen next with the economy as this new government attempts to make its mark is anyone’s guess. But one thing is for sure, it’s not going to be even sailing for some time to come.

To stay updated with the latest news in the property world, subscribe to a free trial of Blue Bricks Magazine here.

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Jill Stevenson

General, Market Pulse

31 August 2022

More Rentals Available in Capital Sees ‘Flattening’ of Rents

More rental properties are available in the capital, resulting in a lowering of monthly rents, according to one leading estate agent.

There are in fact 60 per cent more rental properties advertised in London this month – nearly a quarter more than there was at the start of the pandemic. That’s still 40 per cent fewer than the same time last year (when many tenants moved home). At that time, owners of holiday lets also turned to long-term renting following the effective closure of the tourist market.

Rental income falling in the capital

The data, from Chestertons estate agents, also revealed that many rental properties were from ‘accidental landlords.’ These could be buy to let landlords put off by the low selling prices in the capital. They could also be couples looking to save money by co-habiting and renting out the other property.

The result is the increase in supply is expected to flatten rental prices in the city.

House price drops of seven per cent by 2024

At the same time, homeowners can expect the value of their property to plummet over the next couple of years. Experts began to speculate last week following the latest Office for National Statistics figures, which showed a five per cent fall in house price growth between May and June. Despite this, the average UK house price was £286,000 in June – £20,000 higher than the same time last year.

The predictions are for a seven per cent fall in property prices over the next two years. This is fuelled by expectations that the Bank of England will increase interest rates to 3.75 per cent in April next year. It is currently sitting at 1.75 per cent. In London and the South East – where prices are highest compared to average incomes – the price drops are likely be even more severe. There the price of property could fall by as much as 12 per cent.

Gazumping on the rise

Rightmove recording a drop of £23,000 in asking prices for

property in London this month. The result has been an increase in gazumping tactics, according to several estate agents in the capital.

One conveyancer, from the capital’s Osbornes Law firm said this form of ‘price chipping’ pointed to a weaker market – one that was already swinging from seller to buyer.

A shortage in the number of homes for sale is continuing to support the property market’s frenetic activity but higher mortgage interest rates and increasing inflation is expected to slow things down considerably. To the extent that next year is expected to show the slowest property market activity in over a decade.

But it’s not all doom and gloom. Anthony Codling, of property website Twindig, tempered pessimistic attitudes by reminding the doom-mongers: “We tend to overestimate the likelihood of bad things happening. House prices have fallen in only 16 out of the last 91 years.

‘Increasing living costs and rising mortgage rates are likely to temper house price growth…once we have won the war on inflation we can expect prices to continue to rise.”

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Jill Stevenson

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