Residential and Commercial Property Updates
We understand that staying informed about the property market is crucial for property owners, professionals, and enthusiasts alike. That’s why we’ve compiled the most important information to keep you up-to-date on both the residential and commercial property sectors.
From government updates, housing prices and rental rates to commercial property growth and more. We’ll provide all the information that you need to stay on top of property investments, financial events and economic trends.
We are not responsible or authorised to provide advice on investment decisions concerning property, only for the provision of mortgage advice. We hope you will find this review to be of interest.
Housing Market Review
During the first quarter of 2023, the property market continued to experience uncertainty due to the rising interest rates and the limited availability of favourable mortgage products. This has contributed to a decrease in public as well as private interest in property investment among buyers and sellers alike.
There remains a sense of cautious optimism that the market may improve as the year progresses, but concerns about affordability and access to financing continue to impact the market.
Announcement of the ‘Trailblazer’ deal
At his Spring Budget on March 15th, Chancellor Jeremy Hunt announced ‘trailblazer’ deals which will give local leaders in Greater Manchester and West Midlands Combined Authorities new and deeper devolution powers.
For the first time ever outside London, these leaders will be able to steer the Affordable Housing Programme (AHP) in their areas with strategic direction. This will take place over a two-stage process, with combined authorities initially receiving limited powers to ensure the current AHP overseen by Homes England is executed as planned.
After 2026, for any AHP funding awarded by combined authorities, these will have more directing powers with Homes England regarding site identification and partnership development; unlike London however, Homes England will still play a part in administering this programme.
Cautious boost for buyer enquiries
Royal Institute of Chartered Surveyors (RICS) has unveiled its UK Residential Survey for 2023, revealing a more stable outlook going forward.
Though February had an overall negative trend, new buyer enquiries posted a net balance of -29%–an encouraging improvement from January’s reading of -45%. This result marks the least negative result since July 2022 despite it being the tenth consecutive negative month reading.
Furthermore, new sales indicators were less negative (-26%) in February than they had been in January (-36%), though the time taken for completed sales increased again to almost 19 weeks.
According to Tarrant Parsons, a Senior Economist at RICS, he reports that buyer inquiries are beginning to stabilize as the housing market adjusts to a tighter lending climate and stretched mortgage affordability.
Increasing Rent Pushing Tenants out of London
Industry bodies have warned of businesses being negatively impacted as London rents continue to soar, forcing workers out.
Foxtons reported that rental demand had caused London rents to skyrocket by 20% over the last year; as a result, renters moved further afield looking for suitable living arrangements. While at the same time, average house prices have also fallen by 0.9% according to Halifax.
In spite of these difficult economic times, over half of the landlords planned on raising rents further to offset extra costs. In a survey conducted by Finbri, 63% expressed strong concern or strong concern over how rising interest rates could impact their monthly rental payments.
Current House Pricing Statistics
Deadline Statistics
| House Price Index (Jan 2023) | 152 |
| Average House Price | £289,819 |
| Monthly Change | -1.1% |
| Annual Change | 6.3% |
House Prices
| Region | Monthly Change % | Change % | Average Price £ |
| England | -1.2% | 6.9% | £310,159 |
| Northern Ireland (Quarter 4 – 2022) | -0.5% | 10.2% | £175,234 |
| Scotland | -0.5% | 1.0% | £185,016 |
| Wales | -2.3% | 5.8% | £216,871 |
| East Midlands | -1.7% | 8.6% | £251,177 |
| East of England | -1.1% | 6.8% | £358,114 |
| London | -1.0% | 3.2% | £533,986 |
| North East | 0.6% | 10.0% | £163,371 |
| North West | -2.4% | 7.2% | £214,431 |
| South East | -1.2% | 6.3% | £398,368 |
| South West | -0.4% | 7.1% | £329,691 |
| West Midlands Region | 0.2% | 9.9% | £256,694 |
| Yorkshire and The Humber | -2.5% | 6.5% | £207,635 |
Average monthly price by property type – Jan 2023
| Property Type | Annual Increase |
| Detached £458,066 | 6.8% |
| Semi-detached £282,643 | 7.5% |
| Terraced £237,057 | 7.0% |
| Flat/maisonette £227,951 | 6.3% |
(Source: The Land Registry, Release date: 22/03/23)
Contains HM Land Registry data © Crown copyright and database right 2023. This data is licensed under the Open Government Licence v3.0.
Housing Market Outlook
“The recent run of weak house price data began with the financial market turbulence in response to the mini-Budget at the end of September last year. While financial market conditions normalised some time ago, housing market activity has remained subdued. Inflation has continued to outpace wage growth and mortgage rates remain significantly higher than the lows recorded in 2021. Even though consumer sentiment has improved in recent months, it is still languishing at levels prevailing during the depths of the financial crisis.”
Robert Gardner, Nationwide’s Chief Economist
Source: Nationwide, February 2023
Commercial Property Market Review
Our monthly property market review is intended to provide background to recent developments in property markets as well as to give an indication of how some key issues could impact the future.
Spring Budget – Investment zones announced
On 15 March, Jeremy Hunt unveiled his “Budget for Growth”, with four main components to its success: Everywhere, Enterprise, Employment, and Education. The government’s plans for “Levelling Up” fall under the “Everywhere” pillar and include the establishment of 12 new Investment Zones (similar to Canary Wharf) throughout England, Wales, Northern Ireland and Scotland.
Each of England’s eight zones will receive £80m over five years for skills, infrastructure and tax reliefs. The remaining four Investment Zones will be located across Wales, Northern Ireland and Scotland (at least one zone in each nation) with the incentives for these to be agreed upon with the relevant Devolved Administrations.
The tax incentives correspond to those currently offered to Freeports, including:
- Stamp Duty Land Tax relief for commercial property
- Business rates relief
- Enhanced capital allowances
- Enhanced structures and buildings allowance
- Relief against the cost of Employer’s National Insurance contributions for new employees
Capital values decline in February
CBRE’s Monthly Index for February 2023 reveals a 0.5% drop in UK commercial property capital values.
Rental growth experienced a marginal gain of 0.2% and total returns remained flat at 0.0%. Industrial, office and retail sectors all saw declines in capital values, with the South East experiencing a higher fall in industrial sector capital values than other regions.
The office sector’s decline was driven by locations outside of London, where values fell 1.2% and 1.4% respectively, while central London saw a 0.1% drop.
Industrial and logistics sector – a ‘significant amount of investment capital is sitting on the fence’
According to a recent UK Market Pulse report by Colliers, the take-up of industrial and logistics space in 2023 is expected to decline to approximately 30 million sq. ft., which is down from 36.9 million sq. ft. in 2022.
This anticipated decrease is attributed to occupier cost pressures and decreased retail spending. Despite this, the report states that online spending is expected to remain elevated compared to pre-pandemic levels, which is positive news for the sector.
The report also highlights that with supply remaining low, there is a healthy pipeline under construction, and some more space is being returned to the market.
Finally, the report suggests that a significant amount of investment capital is sitting on the fence and values may be pushed higher in Q2 2023 as commercial tension increases.
Commercial property currently for sale in the UK
Trends
London has the highest number of commercial properties for sale.
Scotland currently has 1,129 commercial properties for sale with an average asking price of £310,863.
There are currently 1,711 commercial properties for sale in London, the average asking price is £1,290,721.
| Region | No. Properties | Avg. Asking Price |
| London | 1,711 | £1,290,721 |
| South East England | 1,436 | £664,959 |
| East Midlands | 815 | £814,637 |
| East of England | 900 | £605,317 |
| North East England | 824 | £341,891 |
| North West England | 1,451 | £425,594 |
| South West England | 1,705 | £551,240 |
| West Midlands | 1,152 | £522,209 |
| Yorkshire and The Humber | 1,236 | £312,524 |
| Isle of Man | 49 | £419,475 |
| Scotland | 1,129 | £310,863 |
| Wales | 860 | £422,583 |
| Northern Ireland | 6 | £320,221 |
Commercial property outlook
Investment queries:
The headline net balance for investment enquires fell to -30 in Q4 2022.
Declines in investor interest were reported across all sectors during the quarter.
Overseas investment demand was down within each sector compared to Q3 2022.
Capital value expectations:
For the industrial sector, the Q4 net balance reading of -18% marks the weakest figure for this metric going back to 2011.
Capital value expectations fell across the office and retail sectors, posting net balances of -54% and -65% respectively in Q4.
For the next 12 months, capital value projections are in negative territory across all three mainstream sectors.
Source: RICS, UK Commercial Property Market Survey, Q4 2022
All details are correct at the time of writing (22nd March 2022)
Closing Statement
Our newsletters intend to be an informative and exciting update on the financial changes throughout the previous quarter. With so much news being circulated each day, it can become challenging to know what to pay attention to and what to forget.
As a property purchaser, updates and news stories can often be confusing and cause unnecessary unease. Our newsletter serves to complement the services we already offer as knowledgeable mortgage brokers. Feel free to reach out to us, outside our quarterly updates, should any developments in the financial market pose any potential hurdles to your mortgage acquisition or property purchase.
We hope you enjoyed reading the second instalment of our quarterly newsletter and look forward to further discussing and updating the latest property market trends in the future.