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UK Property Market Shows Resilience as Activity Increases

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    House Price Growth Suggests Resilience Despite High Borrowing Costs

    Savills recently published its June UK Housing Market Update, using a range of data and sources to give an overview of the current property market trends. This latest report is characterised by market resilience, suggesting modest house price growth and continued recovery in terms of market activity.

    Price growth in the housing market is displaying resilience in the face of high borrowing rates. Nationwide’s House Price Index has shown growth of 0.4% month-to-month in May, with annual growth of 1.3%.

    Zoopla reported yearly UK rental growth of 6.6% in April, slightly down from March’s 6.7% figure. While there has been a slowdown in rental growth since the record-breaking increases of last year, growth is still consistently high, which is good news for those interested in investing in buy-to-let.

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      Sales Activity Close to Pre-Pandemic Levels

      Sales activity is continuing to recover, with the report stating that it is close to returning to pre-pandemic levels. According to the Bank of England, mortgage approvals were unchanged in April, sitting at 94% of their 2017-19 levels. The beginning of the year saw an uptick in agreed sales, which are now showing up as a boost in completed transitions, which grew to 92% of 2017-19 levels. Sales agreed in May were up 10% on their 2017-19 average.

      An increase in supply was observed as sellers returned to the market. An April RICS survey stated that the number of surveyors reporting supply increases has reached the highest level since September 2020. At the same time, Zoopla’s data shows the largest number of homes on its platform for sale in the last eight years.

      Although supply has increased, demand is largely unchanged, meaning house price growth will likely remain muted until demand rises to a similar level.

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      Interest Rate Uncertainty Likely to Have Bigger Impact Than General Election

      According to this recent Savills research, price growth will remain at modest levels until the market sees more significant mortgage rate cuts.

      Over the past few weeks, mortgage rates have remained mostly the same despite a slight increase in swap rates. While this stability has encouraged positive sentiment in the market, the report states that lower rates will boost demand in earnest.

      The lowering of mortgage rates is dependent on Bank of England base rate cuts. However, inflation in April was more elevated than many forecasters expected, with The Office of National Statistics recording inflation data of 2.3%.

      This may mean the first rate cut comes later than previously anticipated. Oxford Economics has predicted that the base rate could drop in August, with an additional cut later this year.

      Savills believes that the speculation surrounding interest rates will likely affect the market much more than the political uncertainty generated by the general election, as the major parties haven’t announced any potentially disruptive policies so far.

      Learn more about the UK property market with our expansive buy-to-let area guides, which cover topics such as investment property available in Chesterfield and investment property available in Dagenham.

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      Jessica Ferris

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      Jessica Ferris is a property writer at RWinvest, helping our readers stay ahead of property market trends with the latest news and statistics.