So far, both candidates have kept to only very brief statements and plans with regards to housing.
“As inflation continues to edge upwards, public sector pay negotiations make the headlines and the war in Ukraine continues, the economic response of the UK’s next prime minister is set to matter,” Stevenson claims.
She adds that, while the UK economy grew by 0.5% in the year to May – and is now anticipated to be 1.7% above it’s pre-pandemic levels - the IMF reports that the global economy has contracted for the first time since 2020.
“In response it has downgraded expectations for economic growth in 2023, predicting UK growth of just 0.5%, far lower than its 1.2% forecast in April,” Stevenson said.
With UK inflation currently at a 40-year high of 9.4%, and set to rise even higher, this rate is not expected to return to the government’s target of 2% for at least two years.
To try and mitigate this, the Bank of England hiked the interest rate by a further 50 basis points – up to 1.75%, its highest level since December 2008 – last week.
“The current situation is not confined to the UK but is a global issue,” Stevenson adds. “As a result, the Eurozone raised interest rates for the first time in a decade in mid-July, while the United State Federal Reserve raised its target benchmark interest rate to between 2.25% and 2.5% after two consecutive 0.75% rises in June and July.”
Although the rate of growth has slowed, property prices continue grow across England and Wales, with low levels of stock and high levels of demand continuing to underpin prices.
In fact, buyer demand remains above pre-pandemic levels, but there are signs that this is starting to change, with new buyer enquiries now beginning to ease.
“RICS report the net balance of agents predicting price growth over the next three and 12 months, while still positive across all regions of the UK, has pared back from the levels witnessed at the start of the year,” Stevenson said.
“At 95,420, the estimate for sales volumes in June is 8% lower than in May, and 6% lower than the pre-pandemic average between 2015 and 2019.”
She says the HMRC data indicates this is the first time in 2022 volumes have dipped beneath 100,000.
Mortgage approvals, considered a good barometer for future market activity, also dropped below their pre-pandemic average in June.
“According to the Bank of England, 63,726 mortgages were approved in June, the lowest monthly total since the Covid-19 market shutdown. Lending, however, remains high with remortgage activity in 2022 tracking above average. At present many buyers remain resolute on price, less than half of properties listed for sale for more than ten weeks having been reduced in price,” Stevenson said.
When looking specifically at prime markets across England and Wales, she added that the upper end of the market continues to perform strongly across many regions.
“The price threshold for a premium property now stands at £783,000, while the average price of a prime market property, at £1.2 million, is 2.6% higher than a year ago,” Stevenson said.
“More than one in three agents report that sales prices are coming in above asking prices for properties marketed at between £500k and £1 million. Higher levels of negotiations are taking place on properties listed at more than £1 million. The prime markets of London and the South East are currently seeing the strongest levels of price growth of all market across England and Wales,” she concludes.