A weakness in the pound, in US dollar terms, is now making London's property market more attractive, while overheating outside of the capital indicates more realistic pricing in regional markets, according to the latest market analysis from Home.co.uk.
Rapidly rising rents have brought yields back up significantly and worsening scarcity of available properties to let will ensure that the trend continues. The total stock of property for sale in the capital region is down 4.7% since October last year.
Meanwhile, stock levels are recovering after the rabid buying frenzy that drove sales agents' portfolios down to unprecedented levels. The greatest increases in sales stock over the last twelve months are in Wales (+49%), the South West (+46%) and the East of England (+42%). The drought is over, and the inevitable rebalancing of supply and demand is underway.
More cautious pricing is apparent across most English regions, Wales and Scotland, as evidenced by small dips in average prices. Panic selling appears unlikely while strong rental demand continues to support property values.
Remarkable momentum remains. Property continues to move through the marketplace at a spritely pace. The Typical Time on Market for unsold property is lower now than it has been throughout the previous four years. This important fundamental measure seems to have been completely ignored by the irresponsible doomsters in the property media. Howling and gnashing of teeth is no substitute for keen and accurate analysis. Every single region in England, Wales and Scotland indicates shorter marketing times (both median and mean) compared to October last year.
Overall, the UK market is returning to a healthier state. Market forces are bringing back balance to supply and demand that was seriously out of whack. Although interest rates have been raised in a vain attempt to curb rising prices, they are still a gift that keeps on giving when compared to inflation.
According to Home.co.uk, the real dark clouds on the horizon for the UK property market are further fiscal and regulatory interference in the sector by central and local government. Absurd proposals by left-leaning pressure groups like rent capping and expensive bureaucratic licensing schemes are existential dangers to the proper functioning of the Private Rented Sector and the property market. Increased taxation of landlords has already taken its toll and discourages investment when the sector needs significantly more.
Furthermore, irresponsible fiscal policy is also a threat to the housing market. The recent mini-budget presented by the new Truss cabinet was enough to trigger chaos in the UK debt markets and it required massive intervention by the Bank of England. Such a reaction by market players serves to indicate what a precarious position the UK is now in, having raised interest rates against a backdrop of massive government debt and a failing economy. The pain threshold has been reached and it's just a matter of time before the Old Lady of Threadneedle Street realises her blunder and backtracks.
In London, rents continue to rise over and above official inflation. What began in Prime Central London with the exodus reversal is now spreading out wider towards the M25. These now high-yielding residential investment properties are looking very attractive, especially to US investors. Given the size and value of the Greater London property market, a return to growth in the sales market will support the entire UK market going forward.
The annualised mix-adjusted average asking price growth across England and Wales is now at 3.9%; in October 2021, the annualised rate of increase of home prices was 7.9%.