properly logo

PROPERTY MARKET UPDATE MAY 2024

Share

With headlines in the news about stagnating house prices and rising mortgage rates, May has been a challenging month, with the cost-of-living crisis still biting homeowners. However, it’s not all doom and gloom! Owning a home is still beneficial, offering long-term living and financial stability.

The end of April saw the release of the BSA (Building Societies Association) report, which confirmed that first-time buyers currently face the most challenging conditions in seven decades to get onto the property ladder, with an increasing reliance on the Bank of Mum and Dad, or having two high incomes.

The report highlights that home ownership among young adults has been declining for twenty years, but, while saving enough money to put down a deposit has long been difficult, the squeeze has been tightened in recent months because of mortgage interest rate increases.

It’s not hard to see why more young people are opting to move back in with their parents, which is now the most commonly reported living arrangement for those aged 18-34. This is in stark contrast to the figures for 1997, which showed that those in the same age bracket were most likely to live as couples with children!

Many first-time buyers are undeterred, though, with recent Bank of England figures showing that over the past three years, over a million mortgages extending beyond the state pension age of the borrower have been taken out. Many of those loans have been approved for applicants under 30 as high mortgage rates lead people to opt for extended repayment periods to keep their costs affordable.

Twice the number of homeowners under 30s with ultra-long mortgages can be seen today compared to two years ago, while the number under 40 has also seen a 30% increase. It’s also clear that first-time buyers are adapting to higher borrowing costs by targeting smaller, more affordable properties. This adjustment is helping to maintain activity levels in the market with a steady flow of new buyers entering the market.?

The Bank of England most recently held the base rate at 5.25% despite predictions that there would be a cut.

Meanwhile, three of the UK’s top lenders announced they would raise their rates on fixed-deal mortgages. NatWest, Santander, and Nationwide are the latest three to follow their rivals who increased mortgage rates after expectations about the speed and extent of Bank of England interest rate cuts were scaled back.

However, a rate cut is expected, followed by further cuts later in the year.

May 2024 was a month of ups and downs in the UK lettings market! The rental market remains robust, with high demand pushing average rents to record levels, which is positive for landlords and investors. However, some tenants are still struggling with the impact of the cost-of-living crisis and its knock-on effect on the number of homes available.

Some good news for landlords has been released in Propertymark’s latest insights report, which shows signs of the rental market stabilising after a rocky period towards the end of 2023 when the percentage of arrears peaks at 4%.

This month’s report reveals that since the start of the year, the number of tenants in arrears has been falling and has now reached a low point of 2.5%, indicating that landlords can start to breathe a sigh of relief and look forward to less frustration over rent collection.

In a recent report from PayProp, their latest Rental Confidence Index revealed that an astonishing 54.5% of the landlords involved in their survey were going through the process of selling their properties!

Unsurprisingly, half of all tenants who moved during the last year did so because their landlord decided to sell up. By contrast, the percentage of tenants who left their homes due to eviction stood at under 12%.

In a smart move by first-time buyers, 66.7% of properties sold by landlords are being snapped up by first-timers. But this means the number of private rentals is dwindling – an issue now seeing prospective tenants fiercely competing to offer on properties.

This year, we are already seeing increased demand for sustainable homes. Energy-efficient features and eco-friendly designs are becoming more sought-after, alongside smart security, energy management tools and automated heating systems.

If you are considering buying or selling a property, don’t hesitate to contact 0207 459 4400 or email [email protected].