Alliance Property Group: Q3 Market Review 2023; Important Updates
Last updated: 2.22pm, Sunday 3rd September 2023
Inflation Down, Unemployment Down, Mortgage Rates Down, House Prices Up, Rents Up.
by Gordon Campbell
September 2023
Inflation Down, Unemployment Down, Mortgage Rates Down, House Prices Up, Rents Up
There is a lot of news and noise about the UK property market.
You need to drill down and into the detail to see what is really happening and not get consumed by the usual mainstream media click-bait doom and gloom headlines the media is all obsessed about.
As the saying goes “bad news sells newspapers”!
This blog shares valuable and important information to the continued underlying strength of property, especially when you get people who know what they are doing working with you.
House Prices
Figures for April - the latest available - in the house market show a 3.5% increase in year-on-year house value growth.
In 2000, the average house price was £75,000. This has increased exponentially and now stands at £260,000.
UK House prices are 65 times higher today than they were in 1970.
Property is very regionalised and localised so do not take any media headlines as what is going on.
The properties we sell in the main area are yet again one of the highest growth areas in the UK.
Annual House Price Growth in Our Main Area: The Highest in Scotland at 12%
House prices will quadruple within the next generation
More demand for sales and rent. That will not change.
Prices will continue to go up. Rents will continue to go up.
Scottish Rental Market
Average rents in Scotland for new tenancies have risen by double digits for the third time in a row since 2022.
The Scottish market, driven by Glasgow is the best performing in the UK, comparable to London.
1 bedroom flats are the highest in demand in the Glasgow area due to the changing demographics.
The average property to rent in Scotland, having surpassed the £1000 mark for the first time in Q1 2023, continued to rise to average £1081 per month but with the rate of growth at 11.4% Year on Year (YOY).
The average property to rent in Glasgow now takes 19 days.
Inflation
Inflation in the UK has begun to fall, the economy is growing, and unemployment is low.
But inflation is still too high. In June, prices were 7.9% higher than a year ago, above Bank of England (BoE) target of 2%.
As the UK’s central bank, an independent body, their job is to keep price rises in the UK low and steady.
The best way they can make sure inflation comes down and stays down is to raise interest rates.
So that’s what they have doing.
Interest rate was raised to 5.25% this month, August 2023.
Source: Bank of England
BoE expect inflation to fall further to around 5% this year and be at their 2% target by end of 2024.
Figures for April - the latest available - in the house market show a 3.5% increase in year-on-year house value growth.
In 2000, the average house price was £75,000. This has increased exponentially and now stands at £260,000.
UK House prices are 65 times higher today than they were in 1970.
Employment
Unemployment in the UK is 3.9% steadily reducing over the last few years.
The Eurozone average is 6.4%.
Spain had the highest unemployment rate out of the OECD member states in Q1 2023 at 12.8%, despite having the strongest economic growth in Europe.
Greece unemployment is at 11.3%.
Czech Republic had the lowest at 2.5%.
Mortgage Rates
NatWest and Virgin Money have become the latest big lenders to slash rates on their fixed mortgage deals, prompting claims that a full-scale home loans “price war” has broken out.
The moves came after it emerged on Wednesday that four of Britain’s largest home loan providers were cutting the cost of their new fixed-rate deals, with Halifax reducing rates by up to 0.71 percentage points from last week.
HSBC, Nationwide and TSB making similar moves.
Twenty-four hours later, NatWest announced it was cutting rates on its house purchase and remortgage fixed home loans by up to 0.65 percentage points, also with immediate effect.
More lenders are likely to follow this trend, and we may even see further rate reductions from those lenders who have already lowered rates.
Summary
We do not agree with some of the more spectacular "Clickbait"-style headlines that foretell doom and gloom and some sharp decreases in prices.
It appears that pessimism is a national fixation, so perhaps we ought to consider reality instead!
Despite the challenging circumstances under which it has had to function, the market has recently shown itself to be extraordinarily robust, yet again.
Property is the best world class assett to face any economic headwinds in the UK.
Prices in Glasgow are still increasing.
That is fuelled by more demand than rent due to the continued strong local and diverse economy and that makes it different from the overall UK house price picture.
That is why the Glasgow property market for sales and Buy to Let rent is one of the most robust in the UK and offers the best value for money, yields, returns, capital growth.
If you want to have an unfair advantage to start or add to your property portfolio, then please get in touch and we will help you.
Alliance Property Group. Making a Difference