Worcester & Droitwich Market Update – July 2019
LOCAL MARKET ROUNDUP
Rather than just focussing on who is about to move into 10 Downing Street I believe it is important to keep our eye on the big picture.
Over a quarter of all sales in April were made to first time buyers and buy-to-let mortgages agreed in March were down by nearly 10%; evidence that the market place is changing.
It may also be worth noting nearly nine million households across England and half a million across Wales are under-occupied, i.e. classed as having at least two more bedrooms than the household needs.
The rise in retiree households (those aged 65 plus) is a significant factor in the growth. The last census reported nearly two-thirds of owner-occupier retiree households are considered under-occupied, this compares to just 15% for lone parent families.
With just 1% of the UK population living in designated retirement accommodation at present, compared to 17% in the US and 13% in Australia, some thinking outside the box in terms of future housing delivery may well be required to meet the nation’s needs in a changing housing market. If you are considering downsizing please come and talk to us about what you are looking for.
NATIONAL MARKET
The HMRC report that the number of properties sold in May was 11.3% lower than a year earlier, dropping below 90,000 for the first time since May 2016.
27% of sales in April were to first time buyers, up from 24% in the same month last year, according to the NAEA Propertymark Housing Report.
Whilst nationally sales volumes are 4.3% lower compared to a year ago, according to Rightmove, 8 in 10 homeowners expect price growth in 2019.
ECONOMY
The UK economy contracted 0.4% in April, according to the ONS, meaning growth for the three months to April slowed to 0.3%. The fall was driven by declining output across the production and construction sectors following stockpiling in March, along with a 24% fall in car manufacturing.
Wages rose 3.4% in the three months to April, beating market and economist expectations (ONS). Wages growth continues to outstrip inflation, inflation in May 2.0%, down from 2.1% in April.
UK employment remains at its highest level since 1971. The ONS report 32.75 million people aged 16-64 were in employment in the three months to the end of April. At 3.8% unemployment remains at its lowest level since the end of 1974.
LETTINGS MARKET
Average rental growth across the London region averaged -0.1% during 2018. The 0.9% rise recorded this month was the highest rate of growth across the capital since September 2017, while in the North East, at 0.5%, rental price growth is at its highest level since the summer of 2017.
Across the South West, South East and East of England, rental price growth currently exceeds annual levels of house price growth.
Average rents paid by UK private tenants grew by 1.3% in the year to May, the highest rate of annual growth in 18 months.
In part, this may be a consequence of the recent changes in legislation and the resulting increase in agents’ management fees, following the Tenant Fee Ban, causing Landlords to look for higher rents.
According to the RICS, tenant demand rose in May for the fifth month in a row. At the same time, new instructions to let properties declined further (as has been the trend for the past three years) which continues to support rental growth.
There were just 5,000 new buy-to-let mortgages issued in March down 9.1% on a year ago according to UK finance. Higher property taxation, loss of interest tax relief and a slowdown in house price growth continue to have an impact on the investor market.