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26th Jul 2023|News|Sales|Lettings|

The Property Market In Review – Property News July 2023

Plenty has happened in the property market in July – from the obvious dip in inflation, to the general cooling of the residential market, and the constant demand for development land. Here are the five headlines you need to know for property news July 2023…

Inflation Dips

The most significant headline of the month came when inflation finally started to dip, reaching the lowest it has been in a year this July. This far exceeded predictions made by financial experts as inflation now sits at 7.9% as opposed to the anticipated 8.2%. But how does this pertain to property news?

Inflation and the property market are closely intertwined, with any change in inflation having a direct impact on the attitudes of buyers and sellers. This is because lower inflation will likely bring down mortgage rates, thereby easing the cost of living for current homeowners whilst making buying more feasible for searching purchasers. Tenants may also feel the effects of this, as landlords will likely be under less financial strain when it comes to mortgage repayments which could result in fewer rental price hikes.

Although it is still early to see the tangible impact of lowering inflation on the property market, this is certainly a move in the right direction.

Property Market Cools

In other residential sales news, the property market has generally cooled over the past month according to research conducted by Rightmove and Knight Frank. Rightmove’s House Price Index shows that property prices have reduced by 0.2% since June as a result of increasingly difficult mortgage rates and the continued cost of living crisis. However, considering the aforementioned dip in inflation, it is hoped that this cooling of the market is only temporary.

Knight Frank is also reporting greater disparity between buyer and seller expectations, with offers being accepted at an average of 95.3% of the asking price in the second quarter of 2023. This indicates that sellers are pricing their properties far in excess of what buyers are willing to pay. As the property market cools and prices become less attainable for buyers, it seems that buyers are negotiating until prices meet their affordability, which suggests that we are currently in a buyer’s market rather than a seller’s market.

Cities See A Residential Boost

Research conducted by Savills has unveiled that prime properties in cities remain far more resilient than their rural counterparts. The ‘race for space’ of the pandemic is slowly giving way to other priorities – namely access to transport connections, city workplaces and leisure amenities. As a result of this priority shift, rural prime property has taken a fall of up to 3.9%. The same cannot be said for city property, which has only dipped by 1.4%. It seems that the countryside property price gains made over the pandemic are slowly starting to fall away. 

Investment Remains Strong

Stepping away from the residential sector, July has shown that commercial investment may be on the rebound. This is particularly evident in the UK hotel sector, with hotels long being deemed a strong hedge against inflation. As such, it is no surprise that over £850 million hotel transactions occurred in H1 2023, with most of these transactions being by private investors. 

There are a number of reasons why hotels are performing so well. Firstly, many consumers are keen to prioritise spending their disposable income on experiences such as holidays rather than on physical items. Secondly, international travel remains popular, especially post-pandemic, meaning that there is always a steady influx of visitors to the UK from abroad. Lastly, hotel owners can utilise their available rooms as a hedge against inflation, updating room prices as often as they want to take advantage of popular peak times and reduce their fees to ensure occupancy. The same can be said of short-term lets and holiday let structures, which similarly act as a hedge against inflation. You can find out more about the advantages of holiday lets in our latest blog.

Logistics Market Is Improving

On the topic of commercial units, logistics has rebounded significantly over the last few months. Vacancy of logistics units in the Midlands recently rose to 6.1%, yet a slew of units under-offer are soon due to complete, which will bring vacancy down to 4.86%. Smaller units seem to have dominated in Q2, with grocery retailers being responsible for 41% of take-up. In other positive news, rental values for logistics units is set to increase by 5.3% per annum for the coming 5 years according to forecasts from RealFor.

Savills also anticipate that take-up of warehouse space will rise in H2 2023. They predict that 224m sq ft of new warehouse space will be required by the end of the year to meet the needs of the growing population and its shopping habits. We anticipate that this could lead to increased competition and prices for land, as both the logistics and residential sectors bid for land to develop upon.

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Now You’re Up To Speed With Property News July 2023…

Every month, we bring you the latest property news hot off the press so that you don’t have to scroll through the seemingly endless onslaught of available articles. We’re dedicated to providing balanced advice and valuable perspectives to our client base, allowing you to make the best possible choice for your future. For more information on the property market, explore our News and Insights page, or fill out the form below.

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