PROPERTY MARKET UPDATE AUGUST

The UK property market continues to evolve, with significant developments affecting buyers, sellers, landlords, and tenants. August 2024 has brought a fresh wave of changes, partly driven by the recent reduction in the Bank of England’s base rate. This latest property market update looks at the latest trends and expert insights, offering an overview of what to expect in the coming months.

A Cooling Market Amid Economic Shifts

The UK property market is experiencing a period of moderation after several years of rapid growth. According to recent data from HM Land Registry, the average house price in the UK is currently just under £286,000, reflecting a 1.2% annual increase. While prices remain high, the pace of growth has decelerated slightly, signalling a more balanced market.

The Impact of the Bank of England’sEngland’s Base Rate Reduction

This month’s key development is the Bank of England’s decision to reduce the base rate to 5.00% (Bank of England—Monetary Policy Report). This move is likely to have a significant impact on the property market. Lower interest rates generally make borrowing cheaper, which could encourage more buyers to enter the market and may provide some relief to those with variable-rate mortgages.

However, the impact of this rate cut may be tempered by the ongoing cost-of-living crisis. Inflation has eased and sits at the Bank’s 2% target, but household budgets still feel pressure. As such, the market may see a cautious response to the rate cut, with buyers weighing the benefits of lower mortgage rates against broader economic uncertainties.

Buying: A Mixed Outlook

The market presents a mixed outlook for prospective buyers. On the one hand, reducing the base rate will lower mortgage costs, making the property more accessible, especially for first-time buyers. Additionally, the slowing rate of house price growth may create more purchasing opportunities at lower prices.

Buying Tips for August 2024:

1. Shop Around for Mortgage Deals: With the base rate reduction, lenders may offer more competitive mortgage deals. It’s advisable to consult a mortgage broker who can help you find the best rates tailored to your financial situation.
2. Consider Fixed-Rate Mortgages: Given the current economic uncertainties, locking in a fixed-rate mortgage could stabilise monthly payments and protect you from potential future interest rate hikes.
3. Focus on Affordability: Ensure your mortgage repayments are affordable even if circumstances change. Lenders are increasingly stringent with affordability checks, so it’s wise to budget conservatively.

However, high living costs and tighter lending criteria continue to pose challenges. Lenders have become more cautious, particularly in assessing affordability. The Bank of England’s latest data shows that the average mortgage approval rate has dropped by 10% year-on-year, reflecting a more stringent lending environment.

Selling: Adjusting to New Realities

For sellers, August 2024 brings a need for realistic expectations. Zoopla reports that the average time to sell a property has increased to 60 days, up from 45 days a year ago.

Selling Tips for August 2024:

1. Price Competitively: In a cooling market, pricing your property correctly is crucial. Overpricing can cause your property to sit on the market longer, which may deter potential buyers.
2. Enhance Kerb Appeal: First impressions matter. Simple improvements like a fresh coat of paint, tidy landscaping, and minor repairs can significantly increase your home’s attractiveness to buyers.
3. Stage Your Home: Consider professional home staging to make your property more appealing. Well-staged homes often sell faster and at a better price.
4. Be Flexible with Viewings: The more accessible your home is for viewings, the more potential buyers you can attract. Being flexible with scheduling can help attract offers faster.

Sellers are advised to price their properties competitively. With more properties available on the market, buyers have greater choice. Sellers should also be mindful of the condition of their homes; properties that are in good repair and presented well are more likely to attract serious offers.

Landlords: Navigating New Regulations

Landlords face a challenging landscape in August 2024, with new regulations and rising costs. One of the most significant changes is the Renters’ Reform Bill, which is expected to come into effect later this year under the new Labour government. This bill aims to abolish Section 21 “no-fault” evictions, strengthen tenants’ rights, and improve the quality of rented accommodation.

Additionally, the Energy Performance Certificate (EPC) requirements are tightening, with all rental properties needing to achieve at least a C rating by 2030. This means landlords may need to invest in energy-efficient upgrades, which could be costly. Conversely, reducing the base rate may provide some financial relief for those with mortgages on their rental properties.

Landlord Tips for August 2024:

1. Stay Ahead of Regulatory Changes: With significant legislative changes on the horizon, landlords should stay informed and ensure compliance. Consider joining a landlord association for updates and support.
2. Invest in Energy Efficiency: Upgrading your property to meet the new EPC requirements ensures compliance and makes your property more attractive to tenants. Government grants and incentives may help offset some of the costs.
3. Review Your Financing: With the recent reduction in the base rate, it may be an excellent time to review your mortgage arrangements. Refinancing could improve your cash flow and profitability.
4. Focus on Tenant Retention: Maintaining good relationships with existing tenants is key in a competitive rental market. Consider offering incentives such as flexible lease terms or minor property improvements to encourage long-term tenancies.
5. Consider Professional Management: If managing the increasing complexities of being a landlord becomes overwhelming, consider hiring a professional property management company. They can handle everything from tenant screening to maintenance, ensuring your property remains compliant and profitable.

Lettings: A Strong Demand but Pressured Supply

The lettings market remains robust, driven by solid demand and a limited supply of rental properties. According to data from Rightmove, average rents across the UK have increased by 6.8% over the past year. The shortage of rental properties, coupled with landlords exiting the market due to increasing regulation and costs, has led to intense competition among tenants.

Unfortunately, this means higher rents and more competition for tenants, making it sometimes challenging to secure affordable accommodation. The high demand presents an opportunity for landlords, but it also comes with the responsibility to comply with the new regulations and maintain properties to a high standard.

A Time of Transition

This is a period of transition for the UK property market. The reduction in the Bank of England’s base rate offers potential benefits, particularly for buyers and landlords, but it is set against a backdrop of economic uncertainty and regulatory changes. Whether you’re buying, selling, or renting, staying informed and being prepared to adapt to these changes will be key to navigating this evolving market successfully.

Properly are your local estate agents in London. We are delighted to bring you our property market updates each month.

If you are thinking of buying, selling or letting a property in London, please get in touch.

Call 0207 459 4400 or email [email protected] to speak with a member of our friendly and experienced team.