Rising energy, fuel and food costs continue to put pressure on household budgets this month. Inflation has continued to pressure the economy, with the Bank of England raising interest rates a further 25 basis points, or 0.25%, to 1.25%. House prices have continued to climb and although monthly mortgage approvals have fallen, the market is generally showing little sign of stress.
Inflation and interest rates
The UK CPI rose by 2.5% in April 2022, bringing annual inflation to 9.0%, the highest rate since January 1989. In a bid to control soaring inflation, the Bank of England has risen interest rates further by 25 basis points, or 0.25%, to 1.25%.
The mortgage markets
Despite many homeowners currently facing higher mortgage payments, NatWest has reported ‘no sign of stress’, with demand for mortgages still strong. UK Finance has also reported a fall in the number of mortgage arrears in Q1 2022. The 5-year fixed rate mortgage (75% Loan-to-Value) reached 2.63% in May 2022. The same rate was 4.28% in May 2012 and 2.03% in May 2017, representing a fall of 39% over the past 10 years, but a rise of 64% in five years.
Help to Buy or Right to Buy
The government announced the final date for reservations under Help to Buy is 31 October 2022. With the scheme closing for good on 31 March 2023. No replacement scheme is planned but the Prime Minister has launched a mortgage review which will look at ways to lower deposits needed to get onto the housing ladder. ‘Benefits to Bricks’ is the latest proposal to boost home ownership, alongside extending right to buy to tenants living in housing association properties.
House prices
The UK housing market has shown signs of cooling, although annual growth (year to March 2022) remains strong at 9.8%. In London, annual growth reached 4.8%. Prices are now 19.7% higher nationally than they were pre-pandemic.
Rents
According to Zoopla, the average rent at the end of March 2022 was £995 pcm, having risen by 11% over the past year. Rental growth is largely being fuelled by a shortage of rental properties on the market.
Demand
The RICS reported demand for rental properties was still outstripping supply in May, with landlord instructions lagging tenant demand. For sales both new buyer enquiries and stock levels remained broadly flat, but more agents were expecting prices to rise rather than fall over the next 12 months.
Travel news
Overseas travel is opening up, Heathrow passenger numbers in April 2022 recovering to 75% of April 2019 levels. In London, bus and tube travel is up 36% and 82% respectively, year-on-year, but is still 25% lower than April 2019.
And in case you missed it…
In our latest JLL Living Priorities Survey we explored whether buyers are waking up to the benefits of a more environmentally friendly home. The Prime Minister has been exploring new initiatives to ease access to home ownership including the extension of right to buy, whilst new JLL data highlights the areas surrounding Crossrail stations which command the highest premiums
