Worcester, Droitwich & Malvern Market Update – February 2022

COMMENT

Consumer price inflation (CPI) has risen to 5.4% in the 12 months to December 2021. This is the highest rate in 30 years, but is expected to fall back after an April peak (ONS). The key driver of house prices, and affordability, is interest rates, which are expected to remain low in the long term, despite a modest rise to 0.5% widely expected in February.

Energy costs are a major component of price rises and this is likely to turn the spotlight on energy efficient homes. Construction of 142,510 new homes commenced in England in the 12 months to the end of September 2021, with 148,820 homes being completed, according to new data released. These represent the strongest annual totals since before the Global Financial Crisis.

Heating and powering buildings currently makes up 40% of the UK’s total energy use. Installing low carbon technology, such as solar panels and heat pumps, and using materials in a more energy efficient way to keep in heat will help cut emissions – lowering the cost of energy bills for families and helping deliver the UK’s climate change ambitions.

Perhaps a new build is a better solution, if you are considering a move, so why not speak to our specialist New Homes Team?

 

LOCAL MARKET ROUNDUP

Over the last year, there have been 4434 sales in Worcestershire, 26% more than the previous twelve months; reflecting a significant post lockdown recovery. 628 sales in Malvern represents an increase of 23% and 1897 sales in Worcester, is 33% higher. In Droitwich, the year on year figure is actually 4.5% lower at 448 versus 469, reflecting the resilience of the local market a year ago.

Average house prices have yet again increased across the county with Malvern rising to £281K and Droitwich £277K. In Worcester, where 43.7% of the sales took place, the average sales price now stands at £242.9K.

The lettings picture has fluctuated over the last twelve months, with an increase of 8% to £759 recorded in the Worcester average. Malvern and Droitwich are slightly higher at £800 and £812 respectively; 5.3% above the Worcestershire average of £771, which has grown by 6%.

 

NATIONAL MARKET

The average property has increased in value in the region of £24,000 over the past year, according to both the Nationwide and Halifax. Nationwide report the average price of a property is now 16% higher than before the COVID-19 pandemic. Rightmove report larger “top of the ladder” and smaller first-time buyer homes both saw significant increases in average asking prices in January, the former up by 1.7% (the equivalent of close to £10,000) the latter by 1.4% (£3,000).

After a record breaking 2021, the rate of annual property price growth is anticipated to moderate over the course of 2022. The Office for Budget Responsibility report price growth is anticipated however in each of the next five years.

Sales volumes of 1.2 million are predicted for 2022, in line with more ‘normal’ market conditions. This follows volumes in 2021 being at their highest level since the global financial crisis.

 

ECONOMY

The ONS reported that the UK economy surpassed pre-Covid levels for the first time in November. The cost of living rose by 5.4% in the year to December its fastest pace in nearly 30 years. The Bank of England warn inflation could rise as high as 6% during 2022, the energy crisis may well see it breach that level. However, inflation is expected to fall over the latter half of the year.

Markets are predicting a further interest rate rise to 0.5% in late Spring with rates increasing to 1% by the end of 2022. However, the impact of the Omicron variant on the UK economy is as yet unknown.

 

LETTINGS MARKET

Nearly half a million landlords expect to expand their portfolio over the next two years. Just over 17.5% of landlords who responded to the 2021 Landlord Trends Survey stated they expected to expand.

Extrapolated to the 2.65 million landlords in the UK on record with the HMRC, this equates to 465,000 landlords. Less than 1% of all landlords cited the COVID-19 pandemic as a reason to either expand or decrease their portfolio over the short term.

 

COMMUNITY

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 have 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 make again this year. In 2021, we donated over £12,000 to local organisations through our Community Fund. If you know of an established community organisation, based in Worcestershire, that you feel should be on the list, of potential beneficiaries, please write to us and tell us why. Contact: community@nicolandco.co.uk