Asking Price Index
Information acquired from https://www.home.co.uk/asking_price_index/ - released 15/06/22 June 2022
Inflation Outpaces Home Price Growth
Headlines
• Asking prices across England and Wales surged a further 0.9% overall in May, bringing the year-on-year rise to 6.5% while inflation leapt to 13% (RPI ex. housing).
• The property market continues to outpace even last year’s blistering pace. Typical Time on Market (median) for unsold property is 60 days, which is 16 days less than in June 2021.
• Supply eases slightly as vendors are tempted by much higher prices. Five per cent more properties were placed on the market last month compared to May 2021. London, however, indicated a 4% year-on year drop in supply.
• The total stock of property for sale in England and Wales nudged up again and passed the 250,000 mark for the first time since October last year.
• The South West property market continues to lead in annualised regional price growth (+10.0%), narrowly ahead of Wales (+9.5%).
• Rents in Greater London continue their upward spiral. High demand and falling supply of available properties to let has pushed up annualised rental growth an alarming 27.6%. The mix-adjusted average monthly rent in the capital region is now 25% higher than in pre-COVID June 2019.
• Asking rent growth across the UK currently stands at 18.8% year-on-year.
• Central London rents continue to set new records as supply plummets. Aside from the City (+51%), the greatest rises in asking rents over the last twelve months are now in Lambeth (+44%) and Hackney (+43%).
Summary
The UK property market forges ahead seemingly undeterred by economic woes and foreign conflicts. Demand remains high, even increasing in London and the North East. Stock levels remain very low by historic standards and consequently prices continue to rise rapidly across all regions.
The supply of new instructions entering the market nudged up slightly this month as more potential vendors are tempted by record prices. It is becoming clear that the Bank of England’s paltry efforts to tame inflation are not working.
The Bank is expected to continue their impotent strategy and raise the UK benchmark rate by just a quarter point next week to 1.25%, while the purchasing power of sterling collapses.
Even by their own preferred measure (CPI), inflation is now 4.5 times their target rate and climbing. Of course, the unprecedentedly large and widening spread between mortgage interest rates and inflation specifically incentivises highly leveraged property purchases. Home prices rose significantly in every English region, Wales and Scotland during the last month. Marketing times remain very low by any historic precedent. Higher prices appear to pose no significant obstacle, as one should expect during a period of rapid monetary inflation.
Such is the vim and vigour of the market that even the North East, formerly overwhelmed with stock and stagnating prices, has now entered a boom phase. Demand has decimated the stock for sale over the last year and prices are rising rapidly. Relative scarcity persists across all regions with the average stock total dropping around 11% year-on-year.
The largest falls in unsold sales stock are found in the North East (19.0%) and London (18.7%), and these trends strongly suggest further strong price growth going forward. However, the first real indications of rising supply are evident in the East of England and East Midlands where the rate of new instructions rose by 10% and 12% respectively compared to May 2021.
Overall, supply across the UK is up 5% year-on-year. Rents are up year-on-year across all regions. The mix-adjusted average rise for the UK is 18.8%. Supply is worsening in this sector too, with newly available rental properties down by 24% compared to May 2021. The annualised mix-adjusted average asking price growth across England and Wales is now at +6.5%; in June 2021, the annualised rate of increase of home prices was 9.0%.