Published: 06/04/2023 By Mateo Asminian & Katherine McDowallSales Review Q1 2023
After a year of incessant economic hurdles and a chaotic Q4, you would have been brave to predict a strong 2023… Although, the picture being painted in property sales in 2023 is not quite the catastrophe that everybody feared; in fact, those more ‘property seasoned’ will tell you that it’s a return to normality – perhaps a slightly more considered market, but “business as usual”.
Last year, we reported a year-on-year cooling of the average value of flats – sitting at £782/sqft in the first quarter – while still constituting over half of all properties that sold in this period. Their values on average have remained almost unmoved a year later (£783/sqft in Q1 2023). Notably, however, there are fewer flats being sold; the data shows a fall of around 27% year-on-year from the 99 that went under offer in the same period in 2022, despite the total number of new flat instructions only decreasing by 7%.
New instructions for houses have also come down (some 6% year on year); however, unlike flats, their popularity has actually increased, with 4% more houses going under offer in the first three months of this year than the same period in 2022, bringing the total to 77.
This popularity shift is expected. Those most exposed to the cost-of-living crisis and the changes in the mortgage market over the last 12 months – young professionals, many of whom would be first-time buyers – are opting against fleeing the nest, swapping rent for a mortgage with a chunky down payment or upgrading on their existing flat. Organically, family houses have continued to attract steady interest despite the financial challenges, from those who are affected proportionally less by those challenges.
Should you be considering a move in 2023 and would like to find out more about the market then please contact Mateo Asminian, firstname.lastname@example.org or Andrew Nunn, email@example.com on 020 8995 1500.
Lettings Review Q1 2023
After a somewhat frantic 2022 which saw rental values increase by up to 15% the jury was out to see if the dynamics would change as we entered 2023.
The well publicised chronic shortage of available properties to rent continues to steal the headlines and already we are finding ‘would-be’ tenants fighting to position themselves in order to secure that elusive home.
“And……….they’re off” would have been an appropriate phrase to describe the rental market in January. The year-on-year W4 figures confirm that the number of new instructions are coincidentally identical to the 2022 number and new lets are only 3% down over the same hectic period in 2022. So properties are hard to find and those that come on the market are attracting multiple viewings and, more often than not, multiple offers within a few days. The numbers tell us in January that 242 new instructions came to market in W4 whilst two months later in March that number had dropped by 56% to 105.
Going forward we don’t envisage the supply levels changing significantly. Whilst rents have grown by around 15% year on year the barrier to entry for buy to let landlords remain, namely higher mortgage costs, larger deposit requirements, more stringent stress testing by lenders, additional investment required to meet ongoing tougher Energy Performance requirements, higher land tax, and in the case of apartments higher annual service charges. The conclusion here is that a new investor buying today would need to see a yield of 5%-7% in order to make any profit at all. Further erosion of stocks level is already evident as 10% of our new applicant registrations are due to their landlords selling the property they currently occupy.
Demand will be steady and outweigh supply as many private tenants continue to relocate back to London to be closer to their place of work combined with a 20% increase in corporate enquiries from our relocation partners. The trade-off here is we have seen some tenants opt out of the rental market and look to purchase a property as intolerable rent increases outweigh the convenience of renting. We have also seen a few tenants end their contracts in order to move further out of town in search of more affordable accommodation as day to day inflation impacts on their disposable income. Interestingly we have seen a 3.4% increase in asking prices for one bedroom flats in Q1 whereas the asking prices for other property types have remained static. Furthermore our renewals in the first quarter 2023 already show an average 6% increase up and above rents agreed in 2022.
Should you require up an up to date valuation in this fast moving market then please speak to Katherine McDowall on 020 8995 1600 – firstname.lastname@example.org , or if you would like to discuss our property management services Suzana Tomasevic can be reached on 020 8995 1600 or email@example.com