Residential property review May 23

Mixed market signals in May

Recent releases from Savills presented mixed signals for the residential market, with the UK Housing Market Update pointing to recovering market activity in May, even as the English Housing Supply Update for Q1 2023 revealed a quarterly drop of 20% in new homes completed.

The number of new sales agreed in April was just -6% below the 2017-19 average for the month, according to TwentyCI. Two further indicators that have remained robust are mortgage approvals and completed sales volumes – the former rose to 85% of the 2017-19 average in March, according to the Bank of England, and the latter to 96% of the pre-pandemic average for March, according to HM Revenue & Customs.

In contrast, after a near-record number of new homes were built in 2022, Q1 2023 saw the number of new homes completed decline by 20% compared to Q4 2022. Only 246,700 new homes were completed in the year to March 2023, 2% below the previous annualised quarter.

Detached homes best performer in past decade

The average price of UK detached homes has increased by 74% in the past decade, according to new research by easyMoney, making it the house type with the largest value increase over that period.

Semi-detached homes now sell for 71.4% more than they did in 2013, while terraced homes have increased by 67.6% and flats by 51%.

Jason Ferrando, CEO of easyMoney commented, “This research demonstrates just how secure property investment is in this country. Flats are, in general, an outlier. While all other property types enjoyed massive price boosts during the pandemic, flats recorded only their third-highest growth of the decade. This is because the pandemic and lockdowns instigated a race for space that flats simply cannot satisfy, and also because of the external cladding issues highlighted by the Grenfell tragedy and which continue to haunt high-rise buildings to this day.

Strongest post-Brexit year for London’s super-prime market

London’s £10m-plus property market recorded its strongest performance since the 2016 Brexit vote in the year to March 2023.

The lifting of pandemic restrictions and a more stable business environment paved the way for £3.1bn to be spent on 161 super-prime properties in the year to March 2023. This was significantly higher than the £2.5bn and 144 transactions in the previous 12-month period; sales had not been so high since 2015-16.

There were 52 sales at £8m+ outside of London in the 12 months to March 2023, a yearly increase of 16% and the highest total in 15 years. Prime property outside London remains subject to strong competition, thanks to tight supply and resilient demand.

All details are correct at the time of writing (24 May 2023)

It is important to take professional advice before making any decision relating to your personal finances. Information within this document is based on our current understanding and can be subject to change without notice and the accuracy and completeness of the information cannot be guaranteed. It does not provide individual tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK. We cannot assume legal liability for any errors or omissions it might contain. Levels and bases of, and reliefs from, taxation are those currently applying or proposed and are subject to change; their value depends on the individual circumstances of the investor. No part of this document may be reproduced in any manner without prior permission.

Chat to the Author, Anne Elliss

Executive Partner, Residential Property, Brentwood office

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Anne Elliss, partner and conveyancing specialist in Brentwood | Tees Law

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