Worcester & Droitwich Spa Market Update – February 2019
LOCAL MARKET ROUNDUP
Brexit continues to make long-term and strategic decisions difficult for UK-based businesses and homeowners. Yet both the UK economy and its housing market registered around 3% annual growth in each of the first three quarters of 2018.
Since the last troughs in GVA* in Quarter 4 2009 (Q4 09) and house prices (Q1 09), both indicators have risen a similar magnitude of 36% and 42% respectively. The relationship between the two indicators, using annual % change on a quarterly basis, suggests a correlation of some form does exist, with changes in house prices lagging by approximately three months. GVA recorded a slight uptick in annual change in Q318 (4%) yet Gross Domestic Product (another measure of economic performance) indicated that the economy was starting to slow.
The consensus of economic forecasters (OBR, IMF, NIES and OE**) for total GDP growth in 2019 to 2022 is however positive at 7.2%, with 1.8% expected to be confirmed for 2018. *One widely used indicator of overall economic performance is ‘Gross Value Added (GVA)’. It measures the increase in the value of the economy due to the production of goods and services. ** Office for Budget Responsibility, International Monetary Fund, National Institute of Economic and Social Science, Oxford Economics.
The average price of a property across England and Wales increased by 2.8% in the year to November, a marginal increase on the 2.7% rise in the year to October but down from a rise of 4.4% a year ago.
Rightmove predict that average asking prices will remain flat in 2019, although they anticipate there will be a North-South divide. Average asking prices across Northern regions are expected to rise by between 2% and 4%, while a price falls of 2% is predicted across London’s commuter belt, and a 1% fall across London itself.
Over the next 12 months, at the national level, the RICS expect prices to remain fairly stable. When looking at regional level, they expect price rises in all regions with the exception of London and the South East.
UK employment hit a record high in November. 32.54 million People aged 16-64 were in employment, the equivalent of 75.8%, the highest proportion since 1971. Average wages, excluding bonuses also rose by 3.3% in the three months to November, continuing to outpace inflation. The rate of inflation fell back to 2.1% in December, its lowest level in nearly two years, thanks to a fall in petrol prices. The figure is close to the Bank of England’s 2% target and may well mean the Bank is less likely to consider any raise in interest rates in the coming months.
A ban on charging tenant fees in the private rented sector is set to become law on 1st June 2019, following the final reading of the Tenant Fee’s Bill by the House of Lords.
Deposits will be limited to a maximum of 5 weeks rent on properties let for under £50,000, with a cap of one weeks rent on holding deposits.
In the final months of 2018, demand for rental properties was stable although new instructions to rent properties fell in every month of the year. Rental growth of around 2% is anticipated for 2019 at the national level. In the 12 months to December, they rose by 1.0%.
Nearly 10,000 fewer loans were issued to buy-to-let lenders for a new house purchase in the year to the end of November compared to the year previously. Data from UK Finance indicates 66,400 BTL loans were issued a fall of 12.6%.