Worcester, Droitwich, and Malvern Market Update – March 2020
LOCAL MARKET ROUNDUP
Over the last 12 months, there have been 4,733 sales across the WR postcode area, 14% less than the previous year. In Malvern, where Nicol & Co will soon be opening their third office, activity was 13% lower with 635 sales, while in Droitwich, 600 sales reflect the resilience of the market, being only 5% down, despite the recent months of uncertainty.
Droitwich and Malvern have similar average prices, close to £250,000; however, in Worcester, where 43.6% of the sales took place, the average sales price is 9.5% lower at £225,454.
Source: Dataloft Land Registry
The Lettings picture is similar with the average rent achieved in Worcester lowest at £604, with Malvern 12.9% higher at £682, 4.8% above the WR postcode area average of £651. Droitwich Spa remains highest at £811, 24.6% above the postcode area average. Over the last twelve months modest rental growth of 1% has been seen in Worcester, with 4% in Malvern whereas, in Droitwich Spa the figure is a healthy 9%.
Source: Dataloft Market Rental Analysis (rental data is based on achieved rents for approximately 10-15% market share, depending on location).
COMMENT
Across the board, we are seeing encouraging signs, at 67,421 mortgage approvals in December were at their highest monthly level since July 2017 and up 4.6% on a year ago according to the Bank of England. It is anticipated momentum will continue into the spring with sales volumes anticipated to rise.
Rightmove report across the UK there have been 1.3 million buyer enquiries fielded by agents since the election. This represents a 15% year-on-year increase and points to an active spring market. An RICs Survey also reports a large increase in new buyer enquiries, with the figure up 17% in December 2019.
First-time buyer numbers hit a 12-year high in 2019, according to research by the Yorkshire Building Society, accounting for 51% of all home purchases with a mortgage over 2019, compared to just 38% in 2008. UK Finance report there were 5,700 new buy to let home purchase mortgages completed in December – that’s 3.6 per cent more than this time last year suggesting that investors are still joining the sector or expanding their portfolios.
Looking at the figures, in our Local Market Roundup, Worcestershire remains an attractive investment location with strong tenant demand, healthy rental growth and steady capital appreciation. Our Lettings team is very well placed to support owners of larger portfolios, with our highly regarded property management service, and are keen to connect with private investors now considering more tax efficient corporate structures. If that is you why not give them a call on 01905 675999.
NATIONAL MARKET
Momentum is building across the UK housing market as spring approaches. The ONS (Office for National Statistics) report average property prices are rising in every region of the UK for the first time in nearly two years.
The Royal Institute of Chartered Surveyors (RICS) and Rightmove report there has been a notable increase in buyer demand in January with both the HMRC and Rightmove citing sales volumes are on the rise.
Both market appraisals and new instructions are on the up, according to both RICS and Rightmove, although demand currently outpaces supply.
ECONOMY
At £511 per week, average weekly wages returned to pre-economic crisis levels for the first time since March 2008 according to data released by the Office for National Statistics. Excluding bonuses, weekly wages rose by 3.2%. Employment levels in the UK also hit a new record high of 32.93 million.
There was zero growth in the UK economy over the final quarter of 2019, month on month, however, the economy grew by 0.3% in December, reversing a decline witnessed in November.
UK inflation has risen to 1.8%, a six-month high, in January according to the latest data released by the Office for National Statistics, above economists’ predictions of 1.6%. The rise is mainly due to the rising price of petrol, up 4.7% on a year ago and airfares falling by less than a year ago. Inflation remains below the Bank of England’s target of 2%.
LETTINGS MARKET
Predictions that landlords would not be buying properties to let out, because of tougher rental taxes and regulations appear to be short of the mark according to new mortgage data.
Statistics for December from UK Finance, the mortgage lenders’ trade body, suggest that there were 5,700 new buy to let home purchase mortgages completed in December – that is 3.6 per cent more than this time last year.
Aspiring first-time buyers squeezed by strict lending criteria continued to rent. This could be encouraging more landlords to expand their portfolios or join the sector.
Mike Scott, chief property analyst at online agency Yopa, says: “It takes a long time for an increase in buyer interest to feed through into mortgage completions so this December figure demonstrates that the upturn in market activity must have started much earlier in the year.”
Finally by way of a reminder, repeating our important advice from last month new Electrical Safety Standards, in the private rented sector, come into force later this year. The regulations will apply to new tenancies from 1st July 2020 and existing tenancies from 1st April 2021. Landlords must ensure all electrical installations are inspected and tested by a qualified person every five years, and provide a report back to the tenant within 28 days.
Once again, if you need assistance in setting this up please contact us on 01905 675999.