Expected Fall in House Prices Creates Opportunities for Landlords
A fall in house prices is expected, which may provide a fresh opportunity for landlords.
As we head towards the second half of 2022, Rightmove is predicting a likely fall in house prices.
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The portal’s latest monthly snapshot showed another record high for the average asking price, but Rightmove is warning that after a very strong first half of the year, it is likely that looming financial constraints, as well as the anticipated further interest rate rises, will manifest in the market behaviour in the months ahead
A greater choice of what’s on the market, plus the usual seasonal variations means that there are likely to be some month-on-month price falls during the second half of this year.
Rightmove expects this to bring house price growth by the end of the year to around the 5% it had originally predicted in December.
Price falls could present investment opportunities for landlords
Tim Bannister, Rightmove Director, says that the exceptional pace of the market is easing a little, as demand gradually softens.
Bannister says it’s ‘very much to be expected’ that price rises begin to slow given the ‘many record-breaking numbers over the past two years.’ He went on:
When we look at the number of buyers contacting estate agents compared to 2019 or the pre-pandemic five-year average, demand is still very high compared to what was once considered normal.
Bannister added that Rightmove is hearing from agents that though they’ve had slightly fewer enquiries per property over the last few months, interest is still significant from multiple buyers and they are still achieving successful sales.
He anticipates that there will be ‘some further slowdown in the pace of price rises’, especially due to the rising cost-of-living and the predicted autumn energy price hikes. Rightmove therefore expects the annual rate of growth to fall from the current 9.7% to around the 5% originally predicted.
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Prices are still at record highs
Meanwhile the latest market figures from the portal show the average price of property coming to market hitting a fifth consecutive record of £368,614. This is only up by a modest 0.3% in the past month as the pace of price growth slows.
More than 500,000 homes are currently sold subject to contract:
- 44% more than it was at this time in 2019
- 39% higher than the pre-pandemic five-year average
Rightmove also warned that a conveyancing log jam means that those who are looking to move this year and have yet to act will need to do so in the coming weeks.
On average, it is currently taking 150 days to complete a purchase after agreeing a sale – 50 days longer than this time in 2019. So if you’re looking to decorate a whole new house this Christmas, you need to come to market in the next few weeks to give yourself the best possible chance of finding a buyer and completing by the end of the year.
Growth in the PRS expected by 2025
In addition, new estimates from Octane Capital, show that the private rental sector (PRS) is predicted to grow by as much as 6.5% by 2025.
This would bring the total number of privately rented dwellings just short of 5.8 million.
Stock levels across each region of Britain show there are almost 5.5 million PRS dwellings across Britain today. That’s 2.4 million more than in 2005 and an increase of 79%, with London by far the largest private rental market in Britain.