The glory days for UK property investors continue. Rightmove, the largest local real estate website, announced that the average asking price of real estate in April rose 9.9% year-on-year to £360,101. In fact, the average house price has risen by £19,082 in the first three months, the largest quarterly increase on record. House prices have hit record highs for three consecutive months, rising by an average of 1.6% (£5,537) per month. The first-home buyer market also recorded record prices, averaging £220,466 per home.
Free real-time quotes for U.S. stocks, foreign exchange, and cryptocurrencies, and get relevant news alerts from your own portfolio.
Across the UK, average listing prices across all regions were higher in April than a year earlier. Statistics show that 53% of properties in the UK are currently selling at or above the final asking price, which is also an all-time high. The time required to sell a property has been reduced from an average of 67 days before 2019 to 33 days now, which has been reduced by more than half in three years, showing that the demand is extremely strong.
In addition to Rightmove, Halifax, the UK’s largest mortgage lender, also released the latest UK house price index. The average house price in April rose by 1.1% to £286,079, rising for 10 consecutive months and the longest rise since 2016. Despite the economic impact of the pandemic, UK house prices have risen by more than £47,500 over the past two years, a record of the past five-and-a-half years, Halifax said.
UK house prices have continued to rise this year mainly because the imbalance between supply and demand has not been resolved, and the number of homes for sale is not enough to meet demand. Britain began to lift COVID-19 entry restrictions in mid-March, and strong buyers surged after the lockdown was lifted, but homes for sale continued to decline. At the same time, many buyers are competing for similar houses. For example, the mainstream way of working has changed after the epidemic, and the hybrid working mode combining remote and office work has become more and more common. Gardens, or even both.
According to Zoopla, another real estate website, demand from potential homebuyers is 58% higher than the average over the past five years. Although it can be seen that the supply and demand will still be out of balance in the future, the housing supply has begun to increase, and the number of houses for sale is also higher than last year, reflecting that the current price has attracted more homeowners to put on the market. The increase in housing supply last month was an average of 5% over the past five years. In addition, the number of buyer enquiries to agents is down 16 per cent from last year’s stamp duty holiday frenzy, a sign that the pace of property price growth is slowing.
The economic outlook is pessimistic and inflation has not peaked
On the economic front, the Bank of England issued a pessimistic forecast on the outlook, warning that inflation may exceed 10% in October, as the UK energy price ceiling will be raised by about 40%, which is bound to exacerbate the rate of price rises. Household real disposable income is likely to fall 1.75% this year, the second-biggest decline since 1964. Although the Bank of England maintained its forecast of economic growth of 3.75% this year, it expects the economy to decline by nearly 1% in the fourth quarter; GDP will shrink by 0.25% next year; the economy is expected to continue to stagnate in 2024, with a growth rate of only 0.25%.
The UK consumer price index (CPI) rose 7% year-on-year in March, hitting a 30-year high. April inflation data will be released tomorrow (Wednesday). Market expectations are that inflation rose 9.1 percent in April from a year earlier, the highest level since 1980. In order to cope with inflation, the Bank of England has raised interest rates by 0.25% to 1% at the beginning of the month, which is the fourth consecutive rate hike. The market forecasts that it will be raised by 0.5% in June; it will rise to 2.75% by the end of 2023, which means that interest rates will be raised by 1.5% during the period.
The economic outlook has become increasingly pessimistic, inflation has not peaked, interest rates have continued to rise, and the burden on homebuyers has continued to increase. There will be single-digit increases. Unless there are low-water real estate or new infrastructure promotion, Amethyst will only be on the sidelines for the time being.
Li Zijing
https://www.facebook.com/Li Zijing-1034323260037317/
This column is published every other Tuesday