26th Oct 2023|News|Sales|Lettings|New Homes|

Monthly Property News – October 2023

As always, the property market has experienced its fair share of ebbs and flows over the past month. As part of our dedication to bringing you the most accurate property news every month, we’ve collated the top four headlines you need to know from October 2023 – from property prices dipping, to mortgage rates starting to come down, and new rents increasing, here’s Centrick’s monthly property news for the month of October.

October Price Increase Lowest Since 2008

The latest report from Rightmove shows that although property values have increased by 0.5% this October, this is the lowest October price increase in fifteen years. On average, property prices increase by 1.4% at this time of year, but some market uncertainties have left prospective buyers feeling dubious about committing to a property purchase. 

This has been corroborated by the latest PropertyMark Housing Insight Report, which revealed that 76% of properties are currently being sold for below asking price. This could reflect a correction in the market as both buy and sell values level out. This is despite a reduction in available stock, which many would assume would create greater competition in the market among purchasers and therefore push prices up – but this hasn’t been happening. This is because the number of searching buyers has also shown signs of slowing comparably August 2023 saw 81 searching buyers registered at each estate agency branch, whereas September has seen a dip to just 60. Whilst this may seem a large drop this is absolutely in line with seasonal trends as year on year as October 2022 saw 64 buyers registered in the same month. Whilst headline grabbing press can often discourage buyers and sellers from seeking their perfect property it’s important to view seasonal figures in context. 

Nathan Emerson, CEO of PropertyMark, has encouraged both buyers and sellers to be optimistic, stating that “this reflects ongoing market uncertainty, but we expect this trend to level out in the short term.”

Mortgage Rates Are Slowly Improving

October has seen some steady improvement to mortgage rates, which have dropped for 11 weeks in a row. This has resulted in slight improvements to buyer affordability, too. This news comes as the Bank of England base rate remains steady and inflation begins to come down, although many experts predict that the base rate may increase on two or three more occasions before it eventually peaks. 

At the time of writing, the average five-year rate is 5.90% and the average two-year fixed deal now stands at 6.34%. This is the lowest these rates have been since June, and bodes well for 2024 as lenders continue to express their confidence in the long-term recovery of the property market and sinking inflation. According to Experian the number of buyers opting for longer terms across their borrowing is also increasing, with 25% of borrowers under 30 now opting for mortgages with terms of 35 years or more. 

Supply And Demand Imbalance Continues

The number of properties available for rent at each agency branch across the UK has remained steady at 11 over the past month. However, the number of searching tenants are continuing to far outweigh the number of available properties for rent, thereby contributing to a pervasive supply and demand imbalance. According to PropertyMark, the average number of new tenants registering per number of rental units available currently sits at 11, causing huge amounts of competition in the rental sector. It is no wonder that rents are rising with great speed. 

Whilst this may be good news for landlords, this is coupled with a continued lack of new homes being built and ongoing planning challenges which is hampering developers. The government have still failed to reach their own housing targets, having underspent by almost £2 billion on the Affordable Homes Programme for 2022-3 and with Homes England having only started construction on 126,800 earlier this year.

New Rents Continue To Rise

Speaking of rising rents, a Zoopla report has unveiled that rents for new lets have risen by 10.3% over the past twelve months. This means that the average tenant now pays an average of £1,164pcm, and spells the 19th consecutive month that Zoopla have tracked over 10% rental inflation.

A number of locations have surpassed the £1,000pcm mark this last month, including York and Cardiff, with Manchester soon to catch up with them by the end of the year if predictions hold true. However, the most extreme price growth has been encountered in Scotland as a result of new rent controls. These new regulations have encouraged many Scottish landlords to secure higher rents upfront at the beginning of a tenancy, thereby increasing the average rental cost significantly by 12.8%. These increases have largely occurred due to increasing landlord mortgage rates, which has made many buy-to-let property owners increase their rents in order to keep on top of soaring mortgage costs. However, with mortgage rates beginning to regulate themselves and come down, we are hopeful that rents may not continue to rise so unsustainably in 2024.

Amends To The Renters Reform Bill

This month, the second hearing of the Renters Reform Bill occurred in parliament, bringing with it new updates. The most prominent aspect of the bill – the removal of Section 21 – is set to be delayed as the government believes that the courts system must be reviewed before no-fault evictions are banned. This could mean digitising the court process or recruiting more bailiffs. This delay to Section 21 being removed is likely due to discontent from landlords across the UK at the thought of losing the bulk of their eviction rights.

Stay In The Loop With Centrick

Whether you’re buying or selling, renting or letting, it can be hard to stay up to date with the ever-changing property industry. That’s why the Centrick team are on-hand every month to provide up to date property news and insights so you never miss a property update again.

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