Hertfordshire property market news and update

With many families taking their first holidays in years, it is no surprise that activity levels were down and asking prices dropped by 1.5% in August (source: Rightmove). The fall was very much in line with average pre-pandemic figures for this time of year, so not much can be read into them. However, with the ongoing cost-of-living crisis, yet another base rate rise, and a change of Prime Minister and a new monarch, the big question is – what does it all mean for the housing market?

Undoubtedly, the power vacuum left by the Tory leadership contest was very damaging. However, the appointment of a new leader, Liz Truss, and her announcement that energy prices would be frozen have taken much of the fear out of the cost-of-living crisis. In addition, the focus on the Queen’s sad demise and Charles’ succession has knocked it off the front pages. It won't be for long, as the cost of living will continue to be a concern, but it should only have a dampening effect on house prices, and the latest figures show demand is holding firm. Buyer enquiries are currently 20% above their level in 2019. At the same time, although the supply of new property to the market has improved slightly, it remains restricted, with the available stock down 39% over the same period. And, even though consecutive base rate rises have pushed the average mortgage payments to a new high for the typical first-time buyer - £1,000 per month for those with a 10% deposit - demand in the sector is still 32% higher than it was in 2019.

Matthew Marchant, Director at Rolstons, says: ”It’s likely that the impact of interest rate rises will gradually filter through during the rest of the year, but right now, the data shows that they are not having a significant impact on the number of people wanting to move. Demand has eased a degree, and there is now more choice for buyers, but the two remain at odds, and the size of this imbalance will prevent major price falls this year. Those looking to move this year who are concerned about interest rate rises, should get a mortgage in principle early on in their moving journey to understand what they could afford to borrow and find out about the rates available to them to assess what they can repay each month.” He added that, despite the various headwinds, he still expects prices to be up by around 7% at the end of this year.

The rental market, unlike sales, shows no signs of slowing. Last year, the average rent growth was under 2%. Now, it is 12.3% (£1,051), which equates to an additional £115 per month for a typical tenant. The rise is a result of ongoing and chronic supply shortages. Currently, there is 50% less available stock than the average over the last five years, and agents typically have just eight available properties per branch. This lack of stock is exacerbated by landlords selling up and tenants’ reluctance to move on. With choice limited and price rises considerably higher for new tenancies (+12.3%) than existing ones (+3.7%), many tenants are, unsurprisingly, choosing to stay put. In response to the rises and the cost-of-living squeeze, many prospective tenants are now looking for smaller cheaper properties to heat and rent. Demand for 1 and 2-bedroom flats has increased but has fallen for 2 and 3-bedroom houses. The rental market has not been functioning properly for some time, but instead of building new homes, which is the only real solution, consecutive governments have turned their fire on landlords instead, ensuring their departure from the market and long-term rental property shortages. With a new Prime Minister in place and a new Housing Minister – Simon Clarke - a more constructive approach will be welcomed by both landlords and tenants alike.