The recent Autumn budget released by Chancellor Philip Hammond offers an excellent insight into the state of the UK economy and housing market. It points at a positive outlook – the economy has grown every year for the past eight years and is expected to continue to do so until at least 2023. 3.3 million more people have entered the workplace over the same period, and an additional 800,000 jobs are forecast to be created in the next eight years.
Positive changes have been recorded in the last twelve months. Average earnings have increased by 3.1% in the last three months compared to the same period last year, and wage growth is anticipated to rise to 3.5% by 2020. Inflation has also fallen significantly, from 2.7% down to 2.4% in September.
These positive changes appear to be reflected in a growth in the housing market. Average house prices across the UK have risen by 3.2% in the twelve months before August 2018. Growth has been fairly stable across the country since April, with the strongest growth recorded in the midlands. Prices are expected to continue to rise steadily over the next year across the country, with the exception of London and the south east.
Thorgills certainly had a strong October, as we agreed nine of the 27 sales recorded in Brentford last month – nearly double any other agent in the area. Nationwide, however, transaction levels remain muted.
98,400 sales were recorded in September – 2.7% fewer than in the same month last year – and the year-to-date monthly average number of sales in 2018 remains just over 98,000. This looks to be due to an imbalance between the supply and demand for properties. 46 properties were available to buy per branch in September, the highest average since March 2016 – while the number of buyers registered per branch is down 14% on last year’s figure.
The recent budget contains measures which may address the low volume of sales, with incentives for first-time buyers appearing in the form of exemptions to the Stamp Duty Land Tax and an extension of the Help To Buy scheme. This should bring more buyers to the market, pushing up demand. However, other features in the budget may raise supply and negate this effect. £500m has been pledged to enable the building of over 650,000 new homes.
In the lettings market, average rents rose by 0.9% in the last twelve months to September – a figure which is unchanged in the last three months. Rents are rising most sharply across Yorkshire, while the midlands are also experiencing higher than average growth. By contrast rents in London have fallen by 0.2% over the last year. Asking prices of two-bedroom flats and smaller properties have risen by just 0.1% in October, as buy-to-let landlords continue to feel the effects of tax changes.