North West Regional Market Report - February 2022
SHORTAGE OF STOCK
Sales volumes to date in 2021 are 16% above the five-year average and there are an estimated 700,000 households currently moving or wanting to move (Zoopla, TwentyCi). Official data shows that September was the third busiest month for sales since records began, after June 2021 and March 2016 (HMRC). Demand from prospective home movers remains higher year-on-year while the shortage of stock, which has epitomised the market throughout 2021, continues. Across the North West it is estimated there is 2 months’ available stock, compared to 4 months’ stock back in 2019 (TwentyCi). Zoopla report stock levels are over a third lower in mid October compared to the five-year average.
With competition for properties fierce, the average price of a UK property has risen by £25,000 over the past year (ONS), with all national price growth indices indicating price remains firmly in positive territory. Average annual price growth in the North West is 12.4%, with the prime market seeing a 16.5% rise. The average price of a prime property here is over £95,000 more expensive than a year ago. Preston, Bolton and Wigan are currently the best performing prime markets. The latest forecasts released by the Office for Budget Responsibility (OBR) suggest property price growth over 2021 will be in the region of 8.6%, with price growth of 3.2% expected over the course of 2022. House prices are not predicted to fall in any of the next five years (2022–2026).
Looking forward, the Autumn budget set an encouraging mood for the economy. Unemployment is likely to peak at 5.2%, far lower than the 11.9% previously predicted by the OBR. The economy is forecast to return to pre-Covid levels around the turn of the year, six months sooner than originally thought. While wages have risen in real terms by 3.4% since February 2020, the Bank of England expects inflation will peak at 5% next April, placing household incomes under pressure. The GfK report that after six months of robust growth, consumer confidence has pared back in recent weeks. Although the Monetary Policy Committee has maintained the base rate at 0.1%, they haven’t ruled out a rise after their next meeting in December. Such a rise could act as a soft brake on the market, but with over 80% of homeowners currently on fixed-rate mortgage deals, it is unlikely there would be any significant market readjustment in the short term.
COP26 has placed climate change firmly in the headlines and for an increasing number of home buyers, green credentials matter. The UK Government has a goal that all homes should achieve an EPC rating of ‘C’ by 2035, with three in every four home movers considering the EPC rating of a property to be ‘important’ or ‘very important’ (Dataloft, Property Academy Home Moving Trends Survey, 2021). Over the past year, just 31% of resale properties sold in the North West had an energy rating of ‘A’, ‘B’ or ‘C’, although 97% of new build homes met this level. With improvements 94% of properties could attain this.
Improvements to the energy efficiency of a home may also add value. Over the past year, homes across England and Wales sold with an energy rating of ‘A’ or ‘B’ have commanded a sales price premium of over 10% above the average rating of ‘D’ (Dataloft,Land Registry).