This time last year we were galloping towards the end of the stamp duty holiday. The market made hay while the sun shone, with more homes changing hands than in any year since 2007. The pace of things last year means year-on-year comparisons tend to be negative. But look back beyond what was the hottest market in 15 years, and things are still very much busier than they were pre-pandemic.
For most of 2021, the average time to sell a home hovered around 25 days. Since then, we’ve seen some homes linger a little longer on the market, with the average time to find a buyer standing at around 35 days so far in July. This is still well below the pre-pandemic summer average of around 45 days. While in London, it takes an extra 10 days to sell a home, with the average home selling more slowly in the capital than the rest of the country in every month since May 2016.
Despite spending a little longer on the market than they did last year, the average seller has achieved over 100.0% of their asking price in every month so far during 2022. So far in July, sellers achieved an average of 100.7% of the price they first came onto the market at, and around 40% of buyers are paying more than the asking price. Like all the other year-on-year comparisons, this figure is down from a peak of 45% late last year, but it’s still well above pre-pandemic norms of 15-20%.
Although fewer homes are changing hands today, the time taken between agreeing a sale and reaching completion has been rising. While understandably this figure rose during the pandemic, it has never really come back down. It now takes 123 days to complete on a sale, with cash buyers taking around 10 days less. This compares to a pre-pandemic average of around 100 days. One in five sales take over 6 months to get over the line, up from just 8% pre-pandemic.
One of the reasons for longer transaction times has been the bounce back in flat sales, which typically take longer to complete than freehold houses. So far 18% of sales in 2022 were flats, up from 17% last year. This has been supported by a bit of a pickup in pace of the London market in recent months. While this figure is still below the pre-covid average of 20%, pent-up demand from flat owners looking to move on means it is likely to pick up further still, even if it isn’t accompanied by a jump in prices. Conversely, with flats typically being cheaper than houses, more sales are likely to mean lower headline prices.
The other big shift this year has been the recovery of less affluent sales markets. Much of the boom last year was driven by the most affluent areas of the country. The 10% most affluent wards saw sales rise 65% between 2019 and 2021, more than anywhere else and above the 12% rise recorded in the 10% least affluent wards. This year we’ve seen a reversal, with the biggest pickup in sales on 2019 levels coming in some of the least affluent wards, spurred on by first-time buyer purchases which peaked at record levels earlier on this year.
So what’s next? It seems likely that rising mortgage rates will bear down on house price growth over the next year or so. Anyone buying with a mortgage will face higher monthly repayments to borrow the same amount as a year ago. But the Bank of England’s tough decisions are unlikely to result in falling house prices, as pushing rates up to a point where they put significant downward pressure on house prices would cause damage to the economy too.
While rising rates may keep a cap on house prices, there is potential for an increase in the numbers of homes coming onto the market and changing hands. Today’s sellers are yesterday’s buyers, having lived in their home for an average of 10 years. Around a decade ago there was a marked upturn in purchases as the market recovered from recession. This potentially means we’re reaching the point in time when a much bigger cohort of movers begin to get itchy feet and start thinking about putting their home on the market.
