24 April 2024 – Spring is the busiest time for the UK property market. The first month of the year showed an overwhelming optimism among aspiring property owners and agents.
Let us see if the current numbers will convey a slow yet steady return to pre-Covid momentum.
Sales agreed show positive growth across the UK
The first quarter of 2024 saw a remarkable improvement across all major regions in the property market.
Leading the charge was Inner London, which had a 21% uptick in sales agreed compared to Q1 of 2023. Scotland and Northern Ireland even recorded a 10% and 8% growth, respectively.
Inner London also topped the list of major cities. Edinburgh is a close second with a 20% increase in sales agreed.
Number of transactions as basis for predicting trends
House prices expert Kate Faulkner OBE believes that transactions can help determine the future of the market.
For example, TwentyCi data on top-performing city transactions compares the figures from 2019 and 2023—the difference between a good and bad year.
Newcastle topped this list with 18,514 recorded transactions in 2019. In 2023, this figure rose to a staggering 19,346. Another example of growth during a bad year was Aberdeen, with 4,457 and a jump to 6,424.
Conversely, cities on the bottom-performing ladder all recorded a decrease in transactions. Nottingham was particularly busy in 2019, with 23,203 transactions. However, this number was reduced to 19,356.
From 17,077 to 13,146, Bournemouth suffered one of the most significant falls in transactions from pre-pandemic levels to now (-23.0%).
Reviewing the difference between a good and bad year may be invaluable in predicting future trends in the UK property market. Notably, the scope must be minimised to a more contained local level.
Historically, trends relied heavily on the prices from the London property market. If prices were low, this would spread to the nearby counties, the surrounding regions, and then the outermost parts of the country. This isn’t the case, as Dumfries (+14.2%) outperforms Exeter (-16.7%) in transactions.
House prices hover near 2023 record
April 2024 sees a 1.1% increase in asking prices based on Rightmove’s House Price index. This jump of £4,207 places this month’s average asking price just shy of the May 2023 record of £372,894.
The annual rate of price growth is at 1.7%, the highest it’s been for 12 months.
The property website attributes this growth to the uptick in activity at the top-of-the-ladder sector. A recorded +2.7% monthly change was significant enough to influence the other sectors.
Number of properties coming onto market at a five-year peak
Good news for buyers! The number of properties entering the property market is at a five-year high.
According to Zoopla, supply is highest in the South West as agents handle 2.5 times more stock than in the spring of 2022. Cornwall has the record for the most improvement (+159%), followed by North Kesteven, Lincolnshire (+155%), Bournemouth, Christchurch, and Poole (+146%).
There is no better time than now for families looking to upsize.
There is 25% more supply of the most popular choice—the three-bedroom house—compared to this time last year. Overall, there is double the supply of homes with more than four bedrooms outside London.
Unfortunately, Zoopla notices a slump in stocks for the higher-value properties in the market. This is especially true as affordability continues to challenge potential homeowners in areas priced above the regional average.
Affordability in question as lenders increase rates
Although the improvement in stock provides more choices for buyers, the current news from mortgage providers says otherwise.
Both Barclays and Natwest announced an increase of 0.1% for their mortgage rates.
The former intends the increase to affect a range of its mortgage products. Meanwhile, the latter will raise some of its two and five-year “switcher” deals for existing customers.
HSBC also announced similar news, although no specific details were released yet. On the other hand, the Leeds Building Society advises a surge in the fixed rate of selected products by up to 0.2% for all customers.
Moneyfacts, the financial information company, disclosed that the average two-year fixed mortgage rate is 5.82%, while the average five-year fixed rate is 5.40%.
In conclusion, the UK property market shows signs of an uptick in buyer and seller activity. However, an aspiring homeowner still has to overcome high prices and an upcoming increase in mortgage rates.
Our Opinion
All the data seems to suggest that the property market in the UK is performing well. With the number of transactions up and now at the same level as in March 2019. This is significant, because this was just before the pandemic hit and created chaos in the market.
It can therefore be seen as ‘normal’ year and a useful benchmark. While it’s good news for buyers and sellers, it’s nonetheless rather surprising. Mortgage rates as well as house prices were much lower then. In April 2019, the average asking price was 22% lower than it is today.
Mortgage rates in April 2019 for a five-year fixed deal were 2.45%, today the rate stands at 4.84%, according to Rightmove. But despite this, transactions are at a similar level. So what’s going on?
One big factor is wage growth, with the average salary having grown by 27% compared to April 2019. So people have more money. But it’s not the only factor, because prices for everyday items have also gone up.
People were always eager to get onto the property ladder and many have a practical approach, meaning they will adapt their wishes to what they can afford. And let’s not forget that rents have risen enormously recently as well, giving many wannabe homeowners an incentive to make it work.
So while it’s surprising, the property market looks in good shape for now.
