2023-05-25-莱坊-UK_Residential_Market_Update_May_2023_2页_163kb

UK Residential Market Update: May 2023 Summary

Market Recovery Post-Mini-Budget

• The UK residential property market has started to recover from the mini-Budget impacts, driven by the Bank of England's 12th consecutive interest rate rise of 25bps to 4.5%, the highest since autumn 2008.
• House prices experienced a slight decline but showed stabilization, with an annual decrease of 2.7% in March, though sales activity has increased by 18% from a recent low.

Economic and Rate Context

• The Bank of England forecasts no recession for the year, with affordability remaining a key constraint on recovery.
• Resolution Foundation data indicates that nearly 1.6 million households face expiring fixed-rate mortgage deals, extending the impact of high borrowing costs.

Transaction and Sentiment Indicators

• Housing transactions rebounded after the mini-Budget spike, with approvals increasing for future activity, though still below 2022 averages of 67,000 monthly approvals.
• The RICS sentiment survey shows improving sales expectations (net balance of -20% in April, up from -52% in December 2022) but persistent concerns in the rental market.

Regional Market Insights

• Prime London Market: Demand remains resilient, with prime central London rents growing by 50% year-on-year as of April. Sales and lettings saw increases across all regions, with new buyer registrations 42% higher in Q1 2023.
• Other UK Regions: Edinburgh experienced a decline in house prices, while Prime Scottish index saw a small flat change. Rents surged due to strong tenant demand outpacing supply.

Rental Market Dynamics

• Rental demand is robust, causing pressure on landlords; tenant costs are expected to continue rising, with affordability issues curbing market recovery.

Outlook

• The upcoming general election may politicize housing policy, potentially easing landlord pressures temporarily but not fundamentally.
• Affordable mortgage products and overall economic stability will be crucial for sustained market growth.