Worcester, Droitwich & Malvern Market Update – April 2023
With price sensitivity increasingly evident in the property market, understanding local market conditions and pricing realistically are essential to achieving a sale. Zoopla reported that while 59% of listings in February had no price reduction, four in ten did. Of those that did have price reductions, two thirds were reduced by more than 5%.
Whilst still reflecting these national trends to a certain extent, our local knowledge, understanding of the market and accurate pricing have resulted in a better performance. 70% of the sales we have agreed in the first two months of 2023 were achieved without the need for a price reduction.
Since the clocks have gone forward, and it feels as though spring is finally here, you may be contemplating coming to the market. If that’s the case, it’s important to recognise that the market is very different compared to last summer. If you had a market appraisal on your home last year, it’d be wise to have it updated before you make any plans or start your search.
New priorities are beginning to emerge, with broadband speed and energy efficiency ranking higher for some, while the burden of maintenance and the cost of heating unused space are problems others are looking to solve.
Whatever your circumstances, the team at Nicol & Co are here to help.
LOCAL MARKET ROUNDUP
The latest available Land Registry statistics, for the year ended 31st December 2022, reveal there were 36% fewer sales in Worcestershire than the previous 12 months, when the transaction numbers had been boosted by stamp duty incentives. The actual number of transactions was 3814. Sales in Worcester were down 37% at 1672, with Malvern and Droitwich both down by approximately 33% with 609 and 439 respectively.
Over the last 12 months, transaction values varied across the county, but all have shown growth. Malvern’s average transaction remains highest at £305.9K up 9% with Droitwich next at £294.8K up 6%. In Worcester, where 44% of the sales were recorded, the average sales price increased by 9% to £253.6K.
The increases in average sales price over the last five years are shown below:
The local lettings figures vary. Across the WR postcode area, the average rent for properties let over the last 12 months has increased by 6%. However, despite significant recent growth, the average rent for properties let in Droitwich at £745 is still 7.2% below the Worcestershire average of £803. In Malvern, the average rent on homes let in the last 12 months remains 14.6% higher at £920 with Worcester close to the average at £789.
Source: Dataloft Market Rental Analysis (rental data is limited and based on achieved rents for approximately 10-15% market share, depending on location).
HMRC has reported that 96,650 sales took place in January 2023. That’s 11% lower than 2022 but on a par with the last so-called ‘normal’ market year of 2019. Buyer demand in February 2023, while understandably lower year-on-year, is 8% stronger than in the pre-pandemic 2017-2019 market, with current market conditions now more aligned to that period (Zoopla).
Mortgage approvals in January fell for the fifth month in succession. Just over 39,600 mortgages were approved, the lowest monthly total since May 2020. The “effective” interest rate on newly-drawn mortgages rose to 3.88%.
40% of respondents to the latest RICS Residential Market Survey state they are seeing more interest from buyers in homes that are more energy efficient, with 61% of respondents stating energy efficient homes were holding their value in current market conditions.
The stock of homes for sale is up by over 60% compared to a year ago (Hometrack).
The UK economy is expected to contract by 0.2% over the course of 2023 according to the latest forecasts from the Office of Budget Responsibility (OBR). This compares to the -1.4% forecast made in November.
Again according to the OBR, inflation is expected to fall sharply over the course of 2023, to just 2.9% by the final quarter.
The Bank of England has raised the base rate of interest to 4.25%, its highest rate in 14 years, with expectations that the rate will peak at 4.5% this year.
In the year to January, monthly rental prices in the UK rose by 4.4%, up from 4.2% in December. The ONS Index of Private Housing Rental Prices includes pre-existing and new lets.
At £1,175, the average rent in the UK rose slightly in February, reversing the trend of the past two months. Growth was located outside of London, with average London rents decreasing for the third month in a row (Homelet).
JLL predict the cumulative growth in rental values will be 15.9% in the five years to 2027, with higher growth in 2023/24 followed by growth closer to 2%-3% in 2025-2027 as inflation is brought back under control.
In response to the regular feedback we receive regarding the value of our Market Updates we have decided to publish more regular market insights online. We are emerging from an unprecedented period of activity at the same time as having to cope with equally unusual economic pressures; added to which there is a measure of political uncertainty fuelled by the mainstream media.
In the midst of this turbulence we believe it is important for you to hear clear, evidence based messages to help you navigate in the current market and make the right choices.
With nearly two decades of experience our MD, Matt Nicol is keen to ensure you have access to expert advice and invites you to ask him directly via our website or by following us on our social media channels.
If the pandemic has taught us anything, it is the value of community and who the real heroes are. Whilst it has been a difficult time for many of us, our key workers, teachers and volunteers consistently stuck to their tasks. Like many, we really admire this commitment and want to continue to support them by donating £100 from every sale we make again this year. So far, we have donated over £40,000 to schools and local organisations through our Community Fund. If you know of an established community organisation or local charity, based in Worcestershire that you feel should be on the list, of potential beneficiaries, please write to us and tell us why. Contact: firstname.lastname@example.org