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Your February market update
What's going on in the property market this February? From politics to house prices, let's keep it simple.
Anyone else starting to understand why they had to make February so short? It’s a dark, cloudy, cold month. But the good news is that Spring is just around the corner, and days are already starting to get longer. So, with a new season on the horizon, what does the property market have in store for us? In this month’s update we’ll be looking at politics and policies, from the instating of new housing minister Rachel MacClean, to new potential laws which could ramp up homebuilding and boost the economy. We’ll also be holding a microscope up to UK house prices: where are they now, and where are they set to go?
Firstly, let's talk politics.
The start of the month saw Rachel Maclean named as the next housing minister. This is the 15th person to hold the position since the Conservatives came to power in 2010, and the 6th in the last year alone. The high turnover has attracted criticism from the public and Labour opposition, with particular fears around the Tories ability to tackle the housing crisis effectively and efficiently.
Speaking of the housing crisis, PM Rishi Sunak has asked Housing Secretary Michael Gove to look into ways to increase the amount of housing in the UK. MP Brandon Lewis is pioneering the campaign to increase the rate of housebuilding, which is currently too slow to keep up with demand and has led to housing being widely unaffordable. His ambitions are twofold. By delivering more homes, his first aim is to “give young people cause to believe that, like their parents, securing a good job will enable them to buy a home of their own, and to settle down and have children.” Secondly, Lewis says growing housebuilding will have a positive knock-on effect on the economy. A report by Policy Exchange agrees with this, stating that building more homes would boost the UK’s economy by £17.7bn, and increasing social housing could reduce the government’s spending on benefits by £10bn.
But how can we increase housebuilding?
The report, backed by Lewis and now being investigated further by the PM, suggests that the government needs to overhaul planning laws and “restore trust in the planning system by giving businesses greater certainty about the availability of land for development”. This basically means: let’s create more council, social and private sector housebuilding by making it easier to build, with a greater supply of land for development, and less uncertainty in the planning process.
Secondly: what’s going on with house prices right now?
Many predicted a serious property market crash at the end of 2022, but it doesn’t seem to be as bad as all that. Yes, there has been a decline in the health of the market: new stats from Nationwide show that annual house price growth went from 2.8% to 1.1% in December 2022, due to the mini-budget and subsequent lack of affordable mortgage rates.
We tend to see growth in the market at the start of the year, as people gear up for a healthy selling market in the Springtime. This year there’s only been a £14 increase in average asking prices from January to February though. This may seem disheartening, but is to be expected following national economic uncertainty at the end of 2022. Experts are hoping that some strength will return to the property market now more affordable mortgage rates are becoming available.
What is house affordability like now?
The lack of supply of houses, plus the current housing crisis has meant that house prices have risen much more rapidly than earnings, meaning the average first-time buyer age has risen and there has been a drop from 70% to 64% in the amount of people in the UK that own their house since the Millennium.
But it’s not all doom and gloom, with Nationwide’s Chief economist suggesting that the recent reductions in mortgage rates, plus houses becoming more affordable, and some increase in income, should all help to improve the prospects of wannabe buyers.
Here at Strike we appreciate that things can seem a bit overwhelming, with new information creating media frenzies everyday. We want to appreciate some small wins: mortgages are becoming more affordable, we seem to have (at least for the time being) sidestepped the widely predicted housing market crash and there’s hope on the horizon for a big boom in housebuilding.
Still have more questions? If you want to talk to us about getting started on your buying journey, don’t hesitate to get in touch.
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