The ONS Monthly Statistics Report for January was released last week indicating overall house prices in England rose year on year by 7.5%. Yorkshire was one of the regions which outperformed the national average with a rise of 8.9%. The average property price in Yorkshire is now £179,248. Our in-house data for sales in north west Leeds is showing an average of £243,020.

Overall sales transactions across the country for the 12 months to the end of January 2021 were down by -15.88%. This is in contrast to the sales at Moores which were up marginally year on year. This being despite 3 months of little activity during the initial lockdown last March. My analysis of the market doesn’t show that Moores had a larger market share year on year, therefore I am presuming Leeds had more than the national average number of sale transactions during this period, demonstrating its popularity, economic activity, etc.

The average price across the country paid by first time buyers was £208,336, with second time buyers paying an average of £291,232. The national figures are up 6.8% and 8.3% respectively year on year. London and the south-east obviously lift these respective figures well above the averages for Yorkshire. At Moores, we’ve seen a marginally higher figure paid by both sectors which I believe reflects demand within the tight geographical area in which Moores operate in north and west Leeds.

We haven’t seen any significant increase in the number of first-time buyers on our books since the Government announced it would be offering lenders a guarantee for the issue of 95% mortgages. I suspect we will see the demand increase once the lenders start to release their new loans to the market. This will undoubtedly drive prices up even further, unless we see a sudden influx of new sales listings, enabling available stock for sale to balance the demand. Although I’m confident more property will find itself coming to market this summer, I suspect the volume will not be sufficient to calm demand.

What does concern me at the moment is the number of landlords looking to sell their buy-to-let properties. With a significant number of landlords leaving the rental market, we’re going to see a shortage of rental property in the near future. Some tenants will have been waiting before buying a property, either because they’ve been in furlough and couldn’t get a mortgage during the pandemic, or they’ve been saving for a deposit, which may now be helped by the forthcoming low-deposit mortgages that are due to hit the market this summer. Even taking into account these tenants moving out of rented accommodation, the level of demand for rented property is such that I suspect even a small shortage of rental supply will lead to rising rents.

An increase in rental values will have a significant financial impact on a large number of those tenants who are forced to rent, for one reason or another. Many landlords who remain in the buy-to-let market are hoping for higher rents, irrespective of supply and demand. Many have seen significant increases in their operating costs over the past couple of years – mandatory upgrades to electrics, the Tenant Fee ban, changes to tax relief on mortgage interest, etc. The changes to tax relief over the past 3 years has seen some landlords, with high borrowings, now running their rental properties at a loss.

I have said in previous Newsletters that from an estate agent’s perspective, rising property prices and rising rents do not significantly increase profits. Estate agents benefit from turnover of stock, whether sales or lettings. Volume sales and lettings are what estate agents want to see to improve profits. With the housing supply remaining relative ‘static’ compared to an ever-expanding population, demand for housing will continue to drive up prices. Government must help to accelerate the process for house building (I’m not entering the arena of whether this should be brownfield, greenfield, etc. – that’s a topic for another occasion). It must also be careful with interfering in the private rented sector e.g., the Tenant Fee Ban legislation was designed to make it more affordable for tenants to rent property but the outcome in north west Leeds was an increase in rents. In the medium term it is now even more expensive for tenants to rent property.