UK housing market continues to grow

May 10, 2023

The UK housing market is currently seeing a steady and sustained increase in buyer demand, in addition to continued growth in the number of agreed sales.

As the sector has picked up pace since the beginning of spring, appetite among homebuyers and property investors continues to gain momentum. The housing market is currently even considered to be more balanced between supply and demand than it has been for some years.

Alongside a robust housing market, the mortgage sector has also stabilised, providing more certainty and confidence moving forward. Even though the Bank of England has kept increasing the base interest rate in recent months, fixed mortgage rates are continuing to fall.

At the same time, there has been an increase in the number of mortgages on offer, creating more competition among lenders and additional products for borrowers to choose from. The calming of the lending sector could continue to have a positive impact on the housing market.

‍

Supply and demand in the housing market

The latest House Price Index by Zoopla revealed buyer demand has seen a steady and sustained recovery across the housing market. Demand reached its highest level this year following Easter break and is even 14% higher than in 2019.

The number of properties for sale also continues to increase and is currently 66% higher than a year ago. Greater availability of homes on the market is boosting choice for buyers and property investors.

At the same time, the number of new agreed sales is 6% more than in 2019, which is in line with the five-year average. The housing market remains on track to record 500,000 sales in the first half of this year. And if current trends continue, there could end up being up to 1.1 million sales throughout 2023.

There is even more choice and demand for new-build properties in particular. In England, around 11,608 new homes were sold last year, making up 2.1% of total transactions across the property market.

‍

House price growth across the UK

While annual UK house price growth has slowed to 3%, a major price re-correction is now very unlikely. At the end of 2022, some commentators were predicting a house price crash, but that still hasn’t surfaced as the sector has instead only seen a correction from the record-breaking house price growth of recent years.

Across the UK, house prices are registering positive annual growth rates in all areas except certain parts of inner London and Aberdeenshire. While house price growth is slower than it has been in recent years, a modest repricing process is running its course. And the worst of the month-on-month price falls now appear to be behind us.

What’s more important when looking at the housing market’s performance is the fact that transaction volumes are continuing to grow as the sector has gained speed throughout spring and heading into the summer months.

Richard Donnell, executive of research at Zoopla, said: “The worst of the pricing adjustment in the housing market appears to be behind us. House price growth will slow further over 2023 and dip into negative territory. More important is that transaction volumes continue to grow.”

‍

A resilient sector with strong prospects

While the property industry has faced some recent hurdles, it’s proven to be resilient, leading UK economic growth for the past year. The strength of the sector is predominantly due to the fact that there’s a major supply and demand imbalance. This is expected to continue as there aren’t enough homes being built to satisfy the ever-increasing demand.

Because of this, UK property remains one of the most reliable investments as it holds steady through external headwinds like economic turbulence. And with the private rented sector continuing to grow as supply isn’t keeping up, this shows the room for growth and potential for strong returns within the buy-to-let market.

The lack of supply creates opportunities for property investors to bring forward additional high-quality rental properties. And increasing stock in the private rented sector can provide significant benefits for tenants looking for their next rental home.

At The Prestbury Advisory, our team of experts can provide you with knowledge and advice on the UK housing market. If you want to speak to us about your next property investment opportunity, email us at contact@theprestburyadvisory.com or give us a call on 01625 725 779.

UK housing market continues to grow

You may also be interested in...

Demand for investment property in the North West is far higher than in London and the rest of the UK

UK asking price record broken: Is this a good time to buy UK property?

Manchester is the leading UK tech destination