September has been a dynamic month for the property market, marked by significant changes, improvements, and challenges. In this monthly property news roundup, we will explore four key developments that have shaped the industry over the past month. From government policy changes to housing market indicators, let’s dive into the highlights of September 2023’s property news!
One of the most notable events of September was the announcement by Prime Minister Rishi Sunak regarding Energy Performance Certificate (EPC) laws. Sunak unveiled plans to scrap EPC targets, marking a significant shift in energy efficiency regulations for homes.
Before the targets were scrapped, landlords were expected to improve their EPC’s to reach a minimum of C for any new tenancies by 2025. This was set to be extended to all tenancies, new and existing, by 2028. Many landlords had already started to implement these changes at great expense in order to be compliant in time for 2025, which has inevitably led to quite the backlash from buy-to-let landlords. However, the Prime Minister argues that the relaxing of these regulations actually takes pressure off landlords to make amendments to their rental units, saving them money in the short term and encouraging landlords to keep their rental units rather than offloading them.
While the full implications of this change are yet to be seen, it’s clear that this decision will have far-reaching effects on the property market’s environmental sustainability and the costs associated with energy-efficient upgrades.
In September, the Rightmove House Price Index revealed a dip in property prices. The annual price change in property prices currently sits at -0.4%, which is the most significant drop since before the pandemic in March 2019. The number of properties coming on the market for sale is 6% below the ten year average, and the number of sales agreed has dipped by 18% when compared to August 2019. This represents an overall slowing of the market.
However, buyers, sellers and investors needn’t fret too much about these dips in property values. These have been anticipated for some time in property forecasts by the likes of JLL and Savills, and represent a stabilisation or ‘correction’ in property values after the unsustainable increase in prices over the past few years. It is anticipated that prices will begin to increase once again by the end of 2024 when the Bank of England base rate is set to come down along with inflation. For more detailed information on what the future of the property market may hold for 2024, be sure to check out Centrick’s Property Price Predictions for 2024.
In a move closely monitored by homeowners and prospective buyers, the Bank of England opted not to increase the base interest rate this month, instead choosing to keep it at 5.25%. Although this means that the base rate is still the highest it has been for fifteen years, this does bode well for those with variable-rate mortgages, as it means their monthly mortgage payments will remain steady for now.
This news comes as inflation slowly starts to creep down, with inflation dipping by 0.1% between July and August. Despite being quite far away from the government’s target of 2%, this dip in inflation demonstrates that the Bank of England’s measures are starting to pay off, hence the pause in increasing the base rate at present.
According to mortgage expert at Rightmove, Matt Smith, “the surprising decision to hold rates rather than raise them as expected is another indication that we may now be at the peak of Base Rate rises. It will be particularly welcomed by those on a tracker mortgage who won’t see a rise in their monthly payments for the first time since December 2021”.
The rental market has seen its own set of changes in September. Zoopla’s latest Rental Market Report illuminated the issue of high rent inflation: renters are facing increasing costs for housing, with rental growth currently at 10.5%. Although this bodes well for landlords, ever-increasing rents are putting pressure on tenants, especially during the current cost of living crisis. As a result, demand for rental units is beginning to slip, with Zoopla reporting that demand has sunk by 20% compared to 2022 data.
This is due to a number of factors – rising rents are stifling social mobility, meaning that more tenants are moving back in with family, or are staying in their current rented property for longer in fear of being unable to find alternative, cheaper accommodation in such a competitive market.
From Rishi Sunak’s EPC reforms to fluctuations in property prices, interest rates, and rental costs, it’s clear that September has been a month of significant changes for the property market. As we move into October, it will be interesting to see how these events continue to shape the industry and influence the decisions of property market stakeholders. At Centrick, we aim to keep you informed no matter what stage you are at in your property journey – from landlords to tenants, buyers to sellers, investors to developers. Stay tuned for more updates in our next monthly property news roundup!
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