A prominent housing market website suggests that unprecedented demand in the rental market may play “a key role” in restricting supply in the sales market - and thus preventing prices from falling.
The Home website says rising yields and short void periods typically under three weeks ensure that letting remains an attractive option for hesitant potential vendors, while also acting as a safety valve for the sales market.
Home, which issues a sales and rentals market snapshot each month, says rents continue to rise overall.
The mix-adjusted average annualised rise for the UK stands at 11.8 per cent, with rent inflation in the West Midlands now over 18 per cent.
The current rent growth leaders in London asking rents are the boroughs of Bexley, Kensington and Hillingdon (up 40, 39 and 34 per cent per year respectively).
The website says that by contract price growth in the sales market has stalled and the stock of unsold property has surpassed the 10-year average to reach a new 30-month high.
Home cautions that both prices and stock levels typically peak during the summer so it remains unclear whether the sales market’s recent volatility is down to the Bank of England’s base rate rises or a seasonal lull.
But the website is no fan of the BoE strategy and says: “Last month’s rash decision by the Bank of England to hike the base rate by a further 0.5 per cent to 5.0 per cent has certainly rattled some nerves.
“The UK property market was steadily regaining confidence in the wake of the rapid price correction at the end of last year with a return to slow growth, but now many fear that increased borrowing costs, along with negative sentiment in the media, may tip the market into a downward spiral.
“Rapidly rising stock levels are always a cause for concern. Pricing had, until now, been benefitting from low stock levels, but last month’s surge over the 10-year average gives cause for anxiety. However, stock levels were recovering from rock bottom after the Covid boom depleted agents’ portfolios to unprecedentedly low levels.”
Home concedes that sales prices are actually still rising in some locations and marketing times do not an overall slowdown.
“The northern regions and Scotland and Wales continue to show considerable improvements on their July 2018 figures, while London and the Midlands, the East and South East of England show slight increases compared to their pre-Covid figures. The Typical Time on Market for the South West is unchanged from July 2018” says the site.
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