Cheadle Property Market Update May 2022

May saw the cost of living crisis deepen, fuel and heating costs increasing, seemingly by the day, a further interest rate rise, which is not expected to be the last one we will see this year, inflation getting out of control, local council elections, chaos at the airports and finally the publishing of the Sue Gray report, as the fall out from Partygate rumbles on. So, all in all, not a great month for most people. 

However, house prices across the country posted a tenth successive monthly increase in May, to keep annual price growth in double-digits, but there are increasing signs that things might be about to change and there were a couple of tell-tale signs in the statistics we saw in SK8 and SK3 during May, more of which in due course.

Commenting on the figures, Robert Gardner, chief economist at the Nationwide “May saw a slight slowing in the rate of annual house price inflation to 11.2%, down from 12.1% in April. Prices also rose 0.9% month on month, after taking into account seasonal effects, which kept the annual growth in double-digits. 

“Despite growing headwinds from the squeeze on household budgets due to high inflation and a steady increase in borrowing costs, the housing has retained a surprising amount of momentum. Demand is being supported by a strong labour market, where unemployment has fallen towards its lowest rate in years, whilst there are an increasing number of job vacancies. At the same time to stock of homes on the market has remained low, keeping upward pressure on house prices. 

“We continue to expect the housing market to slow as the year progresses. Household finances are likely to remain under pressure with inflation set to reach double digits in Q3 and Q4 of this year if global energy prices remain high. Measures of consumer confidence have already fallen towards record lows. Moreover, the Bank of England is widely expected to raise interest rates further, which contribute to a cooling in the market, especially as these feeds through to mortgage rates”

Market forecast downgraded

Savills, one of the leading estate agencies in the UK, have quickly downgraded their five-year forecast, which was always going to be a bit of a crap shoot in the current climate! Saying they now expect a 1% drop in house prices in 2023, followed by modest growth of 1.5% in 2024, 2% in 2025 and 2.5% in 2026. 

Most of the headlines in the main National newspapers of the last two or three weeks have been very negative and talking the market down. Despite our best advice, not to believe everything you read in the press, there are many people who do, and all the negativity will not help an increasingly fragile confidence. 

Are more houses finally coming to the market? 

When we double down and micro-manage our own stats for the SK8 and SK3 area, there have been one or two noticeable shifts in the last month. Only time will tell if this is just a blip or becoming a trend. As you will see, for the first time in a long-time, new listings were up in May over the previous year – 141 in May 2022 against 131 in May 2021. This was mainly caused by an influx of flats coming onto the market, up from 11 to 29 this year, a whopping 164% increase. What was particularly welcome was a 12% increase in the number of family semis going on the market, whilst unfortunately the downward trend in detached houses continued with a 27% drop and terraced houses down 32%. We think the correction of this imbalance may continue, as more people feel the pinch from the cost of living crisis and decide to sell and downsize to reduce cost. 

Is demand cooling?

We said at the end of April that the acid test for demand would come over the coming months as pressure on people’s disposal income and borrowing capacity started to bite, but even we are surprised at the drop in daily property views in May. Now, if we wanted to put a positive spin on this, we could argue that people might just be fed up of looking and not seeing anything new available – there were 11% less available properties in May 2022 – or it could just be that the squeeze on peoples money may just be causing them to re evaluate their property buying plans, but a drop of almost 20% in a single month is definitely a red flag. 

Detached and Semi prices still rising, terraces and flat dropped in SK8 & SK3

The rate of increase has certainly dropped over the last three months but is still healthy when you look at our third image. The acute shortage of detached and semi-detached homes coming onto the market is keeping the prices on an upward curve, up 9.8% and 6.4% respectively year on year to May, and when you think almost 70% of the housing stock in SK8 is made up of detached and semi-detached homes, there is a ray of positivity for beleaguered homeowners. Terraced houses have dropped back slightly 3.8% year on year and flats down 4.1%

Modest increase in sales! 

The final image looks at the number of properties sold in the area, and this shows a modest increase of 5% on the previous May. When this is broken down, the number of detached and semi-detached homes sold is very similar to last May. The biggest increase is in the number of terraced houses sold, up 28% on the previous year, whilst bungalows and flats remained very similar. 

Summary

The market in SK8 and SK3 remains resilient, and demand is strong, whilst there is a significant under supply of property. That imbalance creates a bit of a buffer for sellers, but we feel that it would be advisable to bring forward any moving plans you have, as it is clear the shift is gathering momentum, and moving quicker than many commentators originally thought it might. The drop in the number of buyers looking is the most worrying sign for us and something we will be keeping a close eye on throughout June.

If you would like to know the current value of your home in today’s market, please call Joe, Patrick or Maurice on 0161 428 3663, e-mail sales@mkiea.co.uk or visit our website, choose your preferred method of market appraisal and book online here Book a FREE Market Appraisal