House prices have increased an average of 18% since the first lockdown two years ago. A combination of limited properties on the market and a herd of buyers looking for more space fueled the huge price growth.
But conditions are changing. Inflation is officially running at around 7% but household necessities such as domestic energy and petrol cost 30-50% more than just a few months ago. Add in increases in taxation and most household budgets are under a new level of stress.
And then there are interest rates. Up to 0.75% from a pandemic low of just 0.1% with the hint of more to come as the Bank of England looks to get inflation back to a manageable level over the remainder of 2022.
Typically, this level of pressure to affordability would be damaging to the property industry and likely produce a leveling off of prices. But, for now, prices continue to surge. Using data from Reallymoving which captures prices agreed between buyers and sellers seeking conveyancing quotes (typically around 12 weeks before completion) the whole of the second quarter will continue to see strong price growth.
This may simply be the lag between domestic cost increases happening and homeowners feeling the bite and altering their decision-making accordingly. Only time will tell, but if there was one thing the pandemic taught me, it was never to underestimate the British public’s desire to buy property regardless of the wider context!
Whathome.com recently ran an interesting poll which concluded that 67% of buyers across all regions and buyer types would prefer new build to period property.
The covid pandemic has changed the way people use their home with many working from home and spending more time entertaining in their own property. New properties are designed with these new requirements in mind and require less adaptation than older homes.
Buyers are increasingly conscious of reducing energy consumption both to reduce their own carbon footprint and managing spiraling energy costs. This is an area where new homes are a clear winner.
Access to green space completed buyers top three priorities after energy efficiency and a home office.
It will be interesting to see if these findings become more prominent in house builders marketing over the coming months.
The sale of Scottish headquartered Miller Homes was completed for a reported £1.2bn to US investor Apollo Funds from previous owner, Bridgepoint Group.
Miller Homes grew significantly under the four years of ownership by Bridgepoint with completions up to 4,000 per annum, turnover exceeding £1bn for the first time and an almost 50% increase in profit.
Under new ownership, Miller is targeting further expansion with the stated aim of building 6,000 homes a year in the medium term. This would represent an increase in production of around 50% on current levels and would likely place Miller into the top 6 house builders nationally.
This is Apollo’s first UK House builder acquisition after losing out to rival Aermont, last year to buy Keepmoat Homes. However, the business does own US house builder, The New Home Company and UK mortgage lender, Foundation Home Loans.