The Cotswold property market remains positive as does its outlook.
The number of property transactions is returning towards normal levels; demand remains high, property is selling fast, prices are increasing, and this has created a “record low” of properties available for sale (because they are agreed so quickly). There is a 50% reduction in the number of properties available for sale in the Cotswold market compared to the long-term average.
There is still £475 billion of new money in the economy created by the Bank of England. This excess money will have a far greater impact than high inflation. Property is an inflation-proof asset, and in times of high inflation, people invest in property.
Inflation is running at about 6%, on average earnings growth is at the same level. This will lessen or negate inflation for many but not all. In the private sector, earnings inflation is even higher.
The Bank of England is expected to make it easier to get a mortgage in June. They plan to scrap the 3% above the borrowing rate stress test. This will allow buyers to borrow more, or even enough to get on or up the housing ladder.
Energy and food costs are rising. For the average household, energy costs are expected to increase by £1,250 this year, which will be tough for some. Affordability will be squeezed; however, many Cotswold homeowners are likely to adjust their spending and a proportion will have savings in place to cover this. The impact of rising food costs will also have an effect, however lesser so than in the past – in 1974 the average household spent 25% of its disposable income on food, in 2016 it spent 10%.
This leads me to believe the market will remain strong this year. I stand by my thoughts in January, that we will see further house price growth of at least 5% in 2022.
The lettings market remains very active, with increased investment in property due to high inflation and the ability to borrow money inexpensively, I expect to see more long-term lets coming into the market. This will help increase supply to meet the high demand levels from tenants.