You may have noticed that during the last 12 months, probably more, that the housing market has gone a bit crazy. If you are trying to buy or rent I expect you are having major problems getting viewings for properties, and those of you that do manage to get a viewing will find that sometimes the property sells or rents even before your viewing commences. You may also have noticed that prices are holding and rising, especially in the rental market. Everything is going for asking price or more.
So, what is going on?
Firstly, it is simple supply and demand issues. According to Rightmove, in the first half of this year in the UK 140,000 more sales were agreed than the 2014 to 2019 average, and yet homes available for sale were down 85,000, creating a 225,000 shortfall. This shortage of homes for sale has led to record-breaking house prices. The Nationwide house price index reported a 13.4% annual increase in UK house prices in June.
The latest index shows housing demand is currently 22% higher than a year ago, and the housing market momentum continues to be buoyant. Demand did fall 7% following the SDLT and Land Transaction Tax deadline on 30th June but remains higher than a year ago.
This change is reflected in mortgage approvals, which dipped 6.5% year-on-year in June but remain 20% higher than the long-term June average (Bank of England).
Asking prices have reached record highs across all regions of the UK (Rightmove) and price growth remains strong as demand continues to outpace supply.
So why is the rental market affected so much? The demand for rental properties in Cardiff has massively increased year on year. Cardiff now has an estimated population just shy of half a million people, an estimated increase of 32,000 in the last ten years. Now, during this time many landlords have been slowly selling off their properties due to increasing regulations, plus the added extra expense of owning and running rental properties. Whether you agree or disagree, unfortunately the result is a decimation of rental supply. Added to this is a lack of new landlords buying properties for the same reasons.
All this together has squeezed the rental market, and the result is rising rents. Interestingly, we have seen more rising rent due to applicants out bidding each other, rather than landlords increasing rents.
The average price of property in Cardiff is now £232,779. Which is an annual increase of 9%, while transactions are down 22% on last years figures. While the rental market in Cardiff shows the average rent is now £779. Flats made up 69% of those transactions reaching an average £758 per month. Houses achieved an average rent of £830 per month.
Thinking of selling in Cardiff? Get in touch and I can help discuss the best options to achieve the best price for your property.
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Working with property professionals for over 20 years providing advice and services to all property investors.