Property Growth Forecast Revised

With the general election over, naturally thoughts turn to the economy.  In our last update we cited that affordability was still an ongoing issue for would-be homeowners and what the market needed was an interest rate cut.  So, when the Bank of England cut interest rates from 5.25% to 5% at its August 2024 meeting, the first in more than four years, this was the positive sentiment the market needed.  Rightmove recorded a notable upturn in activity with a 19% year-on-year increase in buyer demand since the announcement on 1st August.    

Estate Agent Today summarised this mood change by giving an overview of recent forecast revisions: “The Treasury regularly compiles independent forecasts to show how City analysts and thinktanks predict that certain parts of the UK economy will perform. The latest report for annual house price growth shows the median prediction is 2% growth [August 2024]. This is already an improvement on July, with a median figure of 0.8%. Meanwhile, this time last year – amid rising mortgage rates and inflation of 6.7% – the best hope for house prices was a 0.2% drop and the worst was an 11.7% decline.”

Encouragingly many of the big lenders have reacted confidently too and competition is starting to creep back into the mortgage market.  Our trusted mortgage partner, The Surrey Mortgage Company, are incredibly excited about the positivity in the market and increased number of competitive products available.   

At branch level we have seen a noticeable increase in first-time buyer activity, who are an incredibly important element in not only the property market ecosystem but also the wider economy.  It is a fine balancing act between making owning a home attractive and ongoing financial stability.  According to the Building Societies Association “becoming a first-time buyer is expensive, possibly the most expensive it has been over the last seventy years”.  Will the first Labour Autumn Budget give first-time buyers a viable solution – we have a feeling they might.   

With increased positivity we anticipate an increase in new sellers coming to market, again as we stated in our last update, in our experience, people don't, or very rarely, cancel their move; they'll delay it until they feel it's a better time. The last two years have been muted, with many citing the want of better times before they will commit; we believe that for some the backend of 2024 will be those times.    

Over optimistic pricing has had an impact on the market this year. The average time to achieve a sale is starting to fall from its January 2024 peak at 78 days.  This has been slowly reducing and seems to have levelled at 59 days, which is still on the whole longer than ideal.  In addition, the average stock per agent is at an annual high of 62 properties per agent.  These two factors would indicate that, on average, the initial marketing price is higher than buyer expectation, creating a very price sensitive market.  If you are looking to sell, pricing correctly from the outset is key to early success. 

As the traditional summer lull comes to an end, we anticipate the final months of 2024 will see an increase in both new stock coming to market and buyer demand.   

If you would like any individual help or advice, please feel free to contact your nearest branch, we would be delighted to help.