With news just in that August saw house prices rising again, the UK housing market would appear to be as resilient as ever. But with rising inflation and interest rates pushing mortgage rates up and with rents at record highs, can these increases continue?
In this latest blog from Coversure Weymouth, the home of great value, high-quality holiday home, home, and landlord insurance, we dive into the detail to provide a Dorset housing market update to find out if Dorset property prices can continue to rise.
What is the Average Price of a Home in Weymouth?
According to Zoopla the average sold price for property in Weymouth in the last 12 months is £292,466. It’s a big number but less so when you compare it to the average sold price for property in the whole of the UK and the wider Dorset region. The average UK sold house price currently sits at £323,424 and in the Dorset region the average prices are at an even higher figure of £389,133. So, Weymouth’s figure suggests that Weymouth can still provide good value for money, particularly when you look at what Weymouth has to offer. The Times recently ranked Weymouth 3rd in their list of the best areas to move to in Dorset when considering amenities, schools and lifestyle.
Are Houses in Dorset Affordable?
According to the ONS Housing affordability report, housing affordability has been worsening since 1997, with the average affordability ratio moving from 3.5 to 9.1. If we look at Dorset as a region the ratio is even higher at 12.2. So, someone working full-time could typically expect to have to spend 12.2 times their annual salary on purchasing a home. Even in Weymouth with it’s lower property prices, getting on the housing ladder is still a stretch with the average salary for jobs in Weymouth somewhere between £25,000-£37,500.
Of course, with Dorset being a prime location for 2nd homes and holiday lets and with recent moves to home working, resident’s don’t necessarily need to be working locally. We also know, from the number of landlord insurance policies we provide, many properties are businesses as well as homes. With that in mind, what does the rental market look like in Dorset in late 2022.
How Much Does It Cost To Rent A Property In Dorset?
According to one property search engine, the average rent currently for properties in Dorset is £1,342 pcm. That’s £199 more than the UK average rental, which itself is up 8.5% on last year. Weymouth is reported to be the 4th most sought after rental area. Higher demand here mean higher prices with rents up 19.1% on 2021.
Why Are Property Prices And Rents High In Dorset?
1. Supply vs Demand – As we’ve talked about in previous housing blogs, the UK has a fundamental lack of housing, with government-set house building targets unmet for many years. When looking at the private rented sector, we’ve also seen a rise in the number of landlords exiting the market. According to Propertymark research the primary reason that landlords leave the sector is to sell. When over half of those properties are not returning to the sector, it’s clear to see why the supply is drying up.
2. Relatively low mortgage rates – while interest rates are rising, it’s all relative and an interest rate of 1.75% means borrowing is still affordable, particularly when you consider that total pay growth has been strong in the early part of 2022. But what happens if inflation continues to rise and the Bank of England raise rates even higher? In August we saw the Bank of England raise interest rates by 0.5%. ThisIsMoney, illustrate that a 0.5% interest rate rise on a typical £200,000 variable mortgage would result in an increase of £1400 in repayments over 2 years. So if we continue to see rate increases in a bid to curb spending, we’ll likely see a decline in the availability of affordable mortgage offers.
The above factors are pretty much the same no matter where you’re looking to make your home in the UK, however, in the Dorset region we have coastal factors in play too.
3. Coastal properties attract a premium – for many it’s an aspiration to live by the sea, as with any aspirational product, coastal properties attract an added premium. Homes by the sea, according to Property Reporter, demand on average, an additional 17%.
4. Increased competition for properties from short-term rentals and holiday lets – for those unable to live permanently by the sea then the next best thing is to holiday by the sea. An estimated 27% of homes in the South-West are second homes, according to the English Housing Survey 2018-19. Whilst the majority of these are thought to be privately rented, increasingly second homes are being registered as short-term holiday lets in response to the staycation trend. This, is only exacerbating the supply of longer-term rental homes further.
5. Local investment and improvement programmes increasing desirability – in Weymouth the investments in the Peninsula such as the Council’s Town Centre Masterplan are having an impact in terms of amenities and therefore desirability. Add to that the rise of hybrid and home working and demand for housing in the area is growing, which is no surprise to us.
What Does The Future Hold For Dorset’s Property Market?
To answer this question would be all crystal ball gazing and unfortunately there just aren’t any certainties. What we can say is that the property market in Dorset has proved to be more resilient than some commentators expected at the start of the year and Dorset is a great place to live and work. How the economy responds to new government policies around cost of living and how the private rental sector responds to changes in landlord legislation due shortly is to be seen. What we do know is how to get homeowners and landlords good quality and good value insurance policies to cover their property.
Get Some Local Property Insurance Help
Whatever you’re circumstances, whether your home is mortgaged or rented and whether your property is your home or your business give the Coversure Weymouth insurance experts a call on 01305 510 344 or email Coversure Weymouth and let us help make sure you’ve got the property insurance cover you need for an affordable premium.
Sources:
UK house prices: Halifax and Barratt warn of challenges ahead | Housing market | The Guardian
House prices in Weymouth, Dorset – sold prices and estimates – Zoopla
House prices in UK – sold prices and estimates – Zoopla
House prices in Dorset – sold prices and estimates – Zoopla
Best Dorset areas to buy a house include seaside beauties and glorious market towns – Dorset Live
Housing affordability in England and Wales – Office for National Statistics (ons.gov.uk)
average earnings in weymouth 2022 – Google Search
Home.co.uk: Dorset Market Rent Summary
HomeLet Rental Index | Average Rent UK |Rental Price Index 2020 | HomeLet Rental Index
Weymouth’s soaring rental market among the top ten areas in the UK – Dorset Live
A shrinking private rented sector | Propertymark
https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/bulletins/averageweeklyearningsingreatbritain/july2022
UK recession explained: What a 0.5% rate rise means for mortgages and savings | This is Money
Where are Britain’s current coastal hotspots? | Property Reporter
English Housing Survey 2018 to 2019: second homes – fact sheet – GOV.UK (www.gov.uk)
Hundreds of second homes changed to holiday lets in Dorset | Bournemouth Echo
