Worcester, Droitwich & Malvern Market Update – October 2022
COMMENT
September turned out to be an extraordinary month. The nation has seen huge change. The passing of Her Late Majesty The Queen, followed by the new Prime Minister and Chancellor signalling a bold new approach to the economy based on stimulating growth, which clearly caught the markets on the hop; and it seems they don’t react well to surprises.
Well perhaps we should just get used to expecting the unexpected. The recent interest rate increases, however, had been predicted and the Bank of England clearly needed to take decisive action to ensure high inflation does not become entrenched.
The UK is certainly not alone in this; the Federal Reserve in the US has also increased rates significantly, so too the European Central Bank which has contributed to pressure on Sterling. Once again, the mainstream media has latched onto the uncertainty and filled our screens with doomsday scenarios.
The true sentiment in the market is “ignore the headlines, keep calm and take advice”.
Now more than ever perhaps is the time to discuss you plans and consider all your options. There has been good news for first time buyers. An equally high proportion of people in the market have no mortgage requirement, as they downsize so their decisions are not affected by interest rates. Those climbing the ladder still have a wide range of fixed rate mortgages available to see them through, what is still predicted to be, a relatively short-term hiatus. The housing market in Worcestershire is still strong.
We are here to help and happy to provide advice whatever your circumstances.
LOCAL MARKET ROUNDUP
The Land Registry is still lagging behind with the latest available statistics. Figures for the year ended 30th June 2022, are reflecting the post pandemic market more clearly. 3596 sales in Worcestershire is 41% fewer than the previous twelve months, as a result of the previous year having been uniquely boosted by stamp duty incentives and the shortage of stock in recent months. 542 sales in Malvern is 26% lower, 1626 sales in Worcester is 37% down and 365 sales in Droitwich, is 47% down year on year. This is also well below the pre-pandemic averages due to large numbers of new build properties coming to the local market in prior years.
Average transaction values vary across the county, again due the distortions created by SDLT incentives. Malvern’s remain highest at £292.4K with Droitwich next at £266.6K and Worcester, where 45.2% of the sales took place, the average sales price is £237.5K.
The increase in average sales prices over the last 5 years, is shown below:
The lettings picture has also been fluctuating over the last twelve months, with an increase of 8% recorded in the average figure for Worcester. Flats, let at an average of £621 per month, represent 42% of the properties let in Droitwich in the last 12 months, where the overall average rent is £720, 8.7% below the overall Worcestershire average of £789. In Malvern, the average monthly rent now sits at £828, which is an increase of 18% over the last twelve months
NATIONAL MARKET
The government have raised the threshold at which Stamp Duty Land Tax is to be paid from £125,000 to £250,000, for first-time buyers the threshold has been raised from £300,000 to £425,000.
At 15.5% UK house price growth in the year to July was at its strongest since May 2003. The rise reflects how property prices a year ago were impacted by the Stamp Duty Holiday. Month-on-month prices rose by 2.0%. The average asking price of a newly marketed property fell by 1.3% in August. This is on par with August activity over the past 10 years but represents the first fall in 2022 (Rightmove).
On average properties in July, sold subject to contract, in just 33 days. However at present it is taking an average of 136 days (4.5 months) to complete a sale (Rightmove).
ECONOMY
The government have announced the largest tax-cutting budget since the late 1980s, In a major shift to economic policy the government is aiming to reduce the tax burden to stimulate economic growth.
The Bank of England have raised the base rate of interest to 2.25%, the seventh consecutive rate rise. The 0.5% rise is lower than the 0.75% many expected. The current rate of inflation is 9.9%.
The UK economy grew by 0.2% in July, following a 0.6% fall in June. The level of growth was slightly below economists expectations (0.3%). The Bank of England have warned that the UK may already be in recession.
LETTINGS MARKET
At 3.4% UK rental price growth in the year to August is at its strongest since records began in 2016. Rental prices continue to rise across much of the UK, the ONS index based on both tenancy renewals and new tenancies.
The government have launched a consultation into the introduction and enforcement of a Decent Homes Standard in the private rented sector in England. The consultation will run until Friday 14 October 2022.
Tenant demand continues to rise but the pace is moderating. RICS report a net balance of +36 of respondents reported an increase over the past quarter. August and September are usually the busiest months for rental activity.
MARKET INSIGHTS
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 £25,000 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: [email protected]