Let’s unpack this in a bit more detail.
According to the latest Halfiax House Price index, the numbers are positive. House prices increased by 1.1% in April, which was the tenth consecutive monthly rise and the longest run since 2016. That means house prices across the UK are up £47,568 over the last two years, with average property prices reaching another new record high of £286,079. While in London, although sales slightly lagged behind the rest of the country, average house prices reached the not insignificant figure of £537,896, a new record.
And it’s these whopping prices that are fueling the influx of new residents to Surrey. While younger people head back to the capital, only to find rental properties at massive prices with very little stock, those who have made the decision to sell up and leave the capital are driving big changes in desirable commuter towns and further afield. But it’s a tough environment out there, with limited stock that’s being viciously fought over. Londoners with bags of cash are finding that their property goldmines aren’t going quite as far as expected as the ball stays firmly in the seller’s court. Surrey and the surrounding areas aren’t immune to the difficulties of a hyper-competitive rental market either. As people make moves to leave the city, they’re finding the lack of properties available is pushing them to rent locally so they’re ready to pounce as and when a new house comes to market.
The impact of the covid migration is showing up in different ways, too. The soul of Southwest London and its cultural footprint is expanding, with traditionally London based affluent eateries and shops like Gails, Megans, Amarino, Everyman Cinema, The Ivy and Cote Brasserie opening up in commuter towns around the capital.
“Cash increase for detached properties, at just under £50,000 over the past year, is nearly five times more than for flats.”
Russell Galley, Managing Director of Halifax, says in the latest report, “housing transactions and mortgage approvals remain above pre-pandemic levels and the continued growth in new buyer enquiries suggests activity will remain heightened in the short-term. The imbalance between supply and demand persists, with an insufficient number of new properties coming onto the market to meet the needs of prospective buyers and strong competition to secure properties driving up prices.”
But this fight for dream homes is almost exclusively focused on houses, with demand for flats lagging far behind, especially if they don’t benefit from any outside space. “There remains evidence that this demand is centred on larger, family homes, rather than smaller properties such as flats,” says Russell Galley. “Over the past year, prices for detached and semi-detached properties have risen by over 12%, compared to just 7.1% for Average house price £286,079 Monthly change +1.1% Quarterly change +2.7% Annual change +10.8% flats. The net cash increase for detached properties, at just under £50,000 over the past year, is nearly five times more than for flats.”
But there could be a storm on the horizon. For a while now, house prices have been buoyed by low borrowing costs, which means that rising mortgage rates are linked to inflation and increases in living expenses. The Bank of England’s recent interest rate rise prompted warnings that inflation could hit 10% before the end of the year, putting the country at risk of falling into a recession.
But it’s not going to be immediate. “For now, at least, despite the current economic uncertainty, the strong increases we’ve seen in house prices show little sign of abating,” says Galley in the Halifax report. “Demand in the housing market remains firm and mortgage servicing costs are relatively stable with fixed-rate deals making up around 80% of mortgages on homes across the industry, protecting many households from the effects of rate rises so far. However, the headwinds facing the wider economy cannot be ignored. The house price to income ratio is already at its highest ever level, and with interest rates on the rise and inflation further squeezing household budgets, it remains likely that the rate of house price growth will slow by the end of this year.”
But in the short term, if you’re a property owner who is considering selling, you’re in a very strong position, especially if you don’t need to buy a new property. But for those looking to buy or rent, the landscape is a little tougher. Not impossible, but be prepared for some strong headwinds and try not to fall in love with a perfect property unless you’re prepared for a fight.
Read the digital edition here:
https://issuu.com/moveli/docs/newspaper_june_22_8_page_issuu
