Webbers Autumn Property Market Review Devon and Cornwall

PROPERTY MARKET

A REVIEW OF THE KEY TRENDS IN THE NATIONAL AND LOCAL HOUSING MARKET

DEVON AND CORNWALL

by Dataloft

WELCOMING A NEW ERA

As we enter the autumn market, the nation respectfully reflects on the 70 year reign of Her Majesty Queen Elizabeth II but also looks ahead with optimism to King Charles III and a new Prime Minister

Demand moderation

Over 100,000 sales have taken place each month to date in 2022, according to the Bank of England, a feat achieved only twice in the last fifteen years (2014 and 2017) While demand remains higher than pre pandemic times, mortgage approvals considered a forerunner for demand have eased back in recent months The Bank of England reports that 63,770 mortgages were approved in July, a 5% fall on the pre pandemic average (2015 2019) Sales prices currently remain remarkably robust, both Halifax and Nationwide reported a month on month rise in August

Prices capped

The freeze in energy prices for households and businesses is expected to help curtail the rapid growth in inflation witnessed over the past few months, the Prime Minister announcing the price cap is expected to curb inflation by up to 5% The Bank Rate remains likely to rise to over 2% by the end of 2022 While over two thirds of outstanding mortgage balances and 95% of new approvals are on fixed rate deals (FCA), for new homeowners and those looking to remortgage, costs are edging up The impact is likely to be most significant in markets where affordability levels are already stretched

The current economic situation is unchartered territory for many homeowners, particularly those not yet born or too young to remember the prolonged periods of double digit inflation and high interest rates in the 1970s and 1980s Mortgage lending regulation also means the housing market is in a different state to the Global Financial Crisis An average of independent forecasts published in August expects the rate of inflation to lower over 2023 and by 2024 to have dipped back to below the Bank of England 2% target Meanwhile, Bank Rates are not predicted to rise much above 3% (NIESR), still low by historic standards

LETTINGS

Proportion of mortgage advances which are fixed rate

The

Nearly 30% of rental tenancies start in August, September or October and demand remains high Although the number of new properties coming to market is showing signs of improvement, this remains low and renters are extending tenancies, impacting supply in some areas

Rising rental values, a supply shortage and enhanced flexibility offered by hybrid working have contributed to a widening of search areas (Rightmove) With three quarters of renters concerned about the impact of the cost of living crisis (Dataloft, Homelet 2022), it is unsurprising that Rightmove reports ‘bills included’ as the most popular renter search term

Analysis by Dataloft

The UK housing market is in a very different place to the periods in the 1970s and 1980s when interest rates and inflation were both in double figures. However, the impact of higher energy bills and mortgage interest rates may well lead to a moderation of sales activity through the autumn.

MCKENZIE

BEHIND THE HEADLINES

The market in context

What is normal?

Housing market activity has been far from normal since the onset of the pandemic Market closure saw UK sales plummet to their lowest recorded level and the stamp duty holiday saw them rise to their highest, breaching 200,000 sales in June 2021 Although sales in 2022 remain above pre pandemic 2019, the differential is reducing In January/February combined sales volumes were over 10% higher, in June/July just 35% higher (Dataloft, HMRC)

Stabilising demand

Buyer demand and prices are steadying After significant price rises across the market in the last two years, 12 month expectations for price growth have eased from a net balance of +78% of agents in February to +3% in August (RICS) Price growth over the course of 2022 is predicted to be around 7%¹, with longer term forecasts indicating that prices are set to stabilise

Predicted property price growth 2022¹

Average mortgage rate2

2%

Predicted Bank Rate by the end of 20221

1Dataloft, Consensus of independent forecasts 2Bank of England, rates as at 31 07 22

Mortgage matters

At 233%, the average interest rate on a newly drawn mortgage in July was the highest since June 2016 (239%), but rates remain less than 3% higher than 2, 3, or 5 years ago² Buyers then were stress tested to a minimum 3% above the prevailing rate Property price growth in recent years also means the Loan to Value required for a remortgage may well be lower for some homeowners

NATIONAL MARKET CONDITIONS

Across all regions of the UK, with the exception of London and Scotland, property prices continue to rise, albeit the pace of annual price growth has moderated While many prospective home movers enjoyed the summer sunshine, Rightmove reported the average asking price of a newly marketed property had fallen by 13% in August This was the first fall in 2022 but was on par with August activity over the past decade

The volume of properties to sell remains low compared to pre pandemic levels, 27% lower in July/August compared to the five year average (Zoopla) However, Rightmove reports a year on year uptick of 12% in new listings in August Low supply continues to underpin property prices

WEST

IRELAND

Annual change in house prices and transactions

100%

REGIONAL ACTIVITY DEVON AND CORNWALL

At 80%, annual property price growth in the South West has moderated from 113% at the start of the year However, in all areas across Devon and Cornwall, annual property price growth remains in double digits Price growth is currently strongest in Mid Devon and Plymouth

Homes continue to go under offer quickly, taking an average of just 29 days to sell (Rightmove) Conversely, across the UK housing market the time taken to complete a sale has risen, now in the region of four months, as conveyancing delays remain a significant issue For buyers seeking to move in by Christmas, the clock is ticking

CURRENT ANNUAL RATE OF HOUSE PRICE CHANGE

Source: Dataloft,

Isles of Scilly

Pace of property price growth moderating

Cornwall Plymouth

Torridge West Devon

North Devon South Hams

Teignbridge

Mid Devon Torbay

Exeter

East Devon

Most active housing markets across the region

SOUTH HAMS

NORTH DEVON

MID DEVON

TORRIDGE

EAST DEVON

TEIGNBRIDGE

EXETER

TORBAY

CITY

WEST

£416,052 £321,346 £306,354 £305,517 £359,534 £317,893 £317,450 £252,283 £223,106 £307,034 £312,488

Market dynamics

Sales volumes are less frenetic than a year ago and levels of private stock turnover, while remaining higher than historic averages, are beginning to moderate Across the region the proportion of homes changing hands is higher than the 43% UK average In just two of the most sought after markets, prices are higher than the current South West average of £322,329

4.5%

Private stock turnover in Devon and Cornwall

New home, new build?

With rising household bills, prospective purchasers may be more likely to consider a new build property ‘More energy efficient’ was cited by over 60% of home movers as a reason for considering a new build home (Dataloft, Property Academy 2021) The National House Building Council (NHBC) states that over 66,855 new homes were registered between April and June, up 45% on 2021, with 11 out of 12 regions in the UK experiencing year on year growth in completions

+19%

New build completions

Q2 2022

ABOUT THE GUILD OF PROPERTY PROFESSIONALS

The Guild is a UK wide network of independent estate and letting agents. Each of our Members has been carefully chosen by us, all agents adhering to our Code of Conduct.

If you want independent guidance on moving home or are looking for the best agent in your area, visit guildproperty.co.uk

The Guild of Property Professionals

121 Park Lane, Mayfair, London W1K 7AG 020 7629 4141 | parklane@guildpropertycouk | guildpropertycouk

Analysis by Dataloft

Dataloft is an established property market intelligence company with a long track record of analysing and reporting on the housing market. We are committed to stripping away the mystique of complex data analysis and adding value for clients through interpretation, insight and creativity.

dataloft.co.uk | dataloftinform.co.uk

Disclaimer: This report is produced for general information only While every effort has been made to ensure the accuracy of this publication, Dataloft Ltd accepts no liability for any loss or damage of any nature arising from its use. At all times the content remains the property of Dataloft Ltd under copyright, and reproduction of all or part of it in any form is prohibited without written permission from Dataloft Ltd.

Date of publication: September 2022 Analysis, editorial, design, graphics and charts by Dataloft.