As we reach the end of the second month of the year, the UK property market is settling into a positive pattern, with buyer confidence continuing to rise and mortgage rates coming down.
A recent Dataloft Poll of Subscribers found that 85% of surveyed estate agents noticed an improvement in buyer confidence over the last three months, while the consumer confidence level has reached its highest point since January 2022.
With hopes high for a reduction in interest rates on the horizon, we are moving towards spring with a solid potential to see recovery in 2024’s housing market.
Biggest Increase for A Year in House Prices
The average house price has risen significantly throughout the UK, according to Halifax and Nationwide, as we move into spring 2024. According to Nationwide, average properties are now worth approximately £257,656, representing a rise of 0.7%. At the same time, Halifax, the largest provider of mortgages in the UK, reports that an average home now has an asking price of 2.5% higher than that from January 2023. This price hike is the most significant experienced since 2020, over double the 0.6% 20-year average. We can put these increases down to falling inflation, improvements in mortgage rates, and growing strength in the labour market.
More Buyer Enquiries Show Increased Market Activity
Prospective homebuyers are now looking to take another step up the property ladder. January is set to be Rightmove’s Agreement in Principle service’s busiest month since its inception in 2022. The increase in demand is being met by equal enthusiasm from sellers, with 15% more new properties coming onto the market compared to last year.
New agreed sales are up by 13%, showing sellers and buyers increasingly align on pricing. Yet, as a fifth of sellers are still accepting over 10% below their asking price to secure their sale, it remains clear that attractive pricing is still crucial.
Mortgage Rates Falling but Base Rate Is Holding
The Bank of England’s Monetary Policy Committee held a meeting on 8th February, at which a majority decision was made to keep the base rate steady at 5.25%. This is the highest base rate seen since 2008’s Financial Crisis, yet instead of building societies and banks retaining higher interest rates on their mortgages, we are starting to see prices falling in February’s mortgage market, indicating that lenders are viewing the choice to hold instead increase the base rate as a positive sign from the Bank of England.
Moneyfacts now reports that the current lowest fixed 2-year mortgage and fixed 3-year mortgage stand at 4.20%, with the lowest fixed 5-year mortgage having an interest rate of 3.93%. The number of available mortgage products for buyers has also increased for the sixth month, with 5,899 options currently on the table.
Growth In the Rental Market
During the last year, growth in the UK’s rental market was 8.3%, representing a deceleration over the past three months from 8.8%. Yet, despite this drop, the growth rate remains at a historic high, with the 0.4% monthly growth comparing somewhat unfavourably to the 0.1% average between 2017 and 2019.
Currently, the average amount tenants pay in the UK each month comes in at £1,200, with renters in London paying the highest typical rent at approximately £2119 and those in the North East paying the lowest amounts at just £695.
London’s growth is slowing down as rents are hitting the affordability ceiling. It is now expected that rental growth will slow down as affordability worsens, keeping demand in check. Landlords appear to be taking a more realistic approach to rental pricing, perhaps considering the cost-of-living crisis as they set new rates. This is good news for those still unable or unwilling to purchase their property.
Heading In the Right Direction for Spring?
With the start of 2024 seeing signs of success in the property market, we could be heading in the right direction for a positive Spring. As we move forward, Tenants and home buyers will likely see improvements, making this an excellent time to start looking for a new home. As March is traditionally the month during which properties are most likely to secure a buyer, now is the perfect time for anyone considering selling to move towards finding an estate agent.
What Next?
We are delighted to bring you our property market updates each month. If you are considering buying or selling a property in London, please get in touch with our friendly team at 0207 459 4400 or email mariel@properly.space.
