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Housing market adjusting

Sellers are becoming more realistic on pricing with evidence to suggest this, accepting on average £18,000, below marketed price, as previously explained the market got to such an inflated point through the boom it was realistic, irrelevant of mortgage rates etc that the housing market had to re-adjust. Sales agreed are lower have been the lowest in 3 years however have increased by 15%. There is a 6 year high in properties available to purchase, re-enforcing a buyers' market, most notably for 3- & 4-bedroom homes. Pricing falls will continue to run over 2024 at a modest rate.

 

Strong sales volumes still

Buyers demand had weakened in the summer months. However, Since August bank holiday there has been a modest rebound, however demand remains 13% lower than 2019. Demand is 10% higher than when the mini budget drove a rapid decline in buyer interest. Sales volumes have increased showing a  greater realism on the part of sellers and, alongside the general consensus that mortgage rates will continue to fall over 2024, its likely this will further increase. By Mortgage rates still dropping, it is giving buyers confidence to move compared to Autumn when buyers were waiting to see what would happen.

 

 

Property Prices down by 1.2%

Hometrack/Zoopla's latest property index (graph below) shows the average UK house price has fallen by 1.2% over the last 12 months! This Is one of the biggest drops are seen in the East at -2.6%, followed by the South East at -2.4% and London at -2%. Outside of Scotland, that has registered a 1% growth, all other areas are recording modest falls. The largest postal area drop has been in Colchester at -4%, no areas have recorded over a single digit loss. All these large price drops are due to buying power affected in the last 16 months.

 

 

Value for Money In London

Yes you may be thinking... London = Value for money does not add up. Yes London property prices are higher in real terms, however over the last six years London has not kept up with other southern area prices rises, therefore it feels like value for money those comparing over those six years. This is demonstrated in the price falls, London is down -2% over the past year, which is the lowest throughout the South East and commuter areas. The average value of a London home is just 8% higher than seven years ago, in nominal terms, whereas UK house prices are 28% higher. New sales have rebounded more in London than any other part of the UK over the last 2 months. This has led to a slight firming in prices and values in the EC postal area are positive at +0.6% over the last year.

 

Record high of homes on the market

The key driving factor to house prices inflating was due to the pandemic and the shortage of 3 bedroom properties to purchase. Now the position has moved to having the highest number of homes to sale in six years. The rebound has mainly been in the 3 & 4 bedroom homes, a trend followed throughout the UK. The only areas that still sit below the pre-pandemic levels are North-East, North West and Scotland. This is giving buyers more options meaning sellers have to be more realistic on price.

 

 

Highest discount on asking prices in 5 years

A buyers market is now evident, in the fact of discounts to asking prices hitting a 5-year high. We would suggest this is demonstrating greater realism amongst sellers, understanding that the pandemic boom is over, accepting realistic offers. Whereas during the pandemic, buyers were having to offer asking price or above to secure a property. In the first six months of 2023 discounts to the asking price averaged -3.4%, this has now increased to -5.5%, which averages £18,000, throughout the UK. This is the largest discount to asking prices since 2018.

Overview

Prices are most likely to keep falling and will continue modestly throughout 2024, however this was a reality of what needed to happen to make homes more affordable. There is positivity in terms of the increase to agreed sales, showing buyers entering the market with more confidence with the continuing fall of mortgage rates, alongside sellers being more realistic on pricing. We would expect to see a decline in houses available for sale, with sellers not achieving what they hoped to withdraw from the market, with a view to re-launch marketing during 2024. Homeowners looking to sell in 2024 need to set their asking price realistically and accurately to achieve a good sale price, no more 'testing the market' values, as this will affect the overall amount, they end up achieving. Specifically due to increased supply. Financial markets expect the Bank of England to start cutting rates around the summer of 2024. If mortgage rates continue to fall further this will improve sales demands!