Is it time to start planning your move this Autumn
With mortgage rates for five-year fixed deals dropping to 4.5%, we’ve seen a 20% increase in buyer interest since July 2023. The average house price has risen by 1.4% year to date and is forecast to increase by 2.5% by the end of 2024.
Well, Autumn is definitely upon us, with the weather now chilly and overcast; however, there is some warmth in the news as we’ve just received word that UK inflation has dropped to 1.7%. This is the lowest rate we’ve seen since April 2021 and now falls below the Bank of England’s target of 2%.
Supply and Demand:
The number of homes on the market has reached a seven-year high, which could lead to a price correction if there are no changes in the market.
However, with mortgage rates for five-year fixed deals dropping to 4.5%, we’ve seen a 20% increase in buyer interest since July 2023. Given that five-year fixed mortgage rates have recently dropped to 4.5%, borrowers switching from a higher rate (e.g., 6.39%) could potentially see significant savings.
To illustrate:
The average UK mortgage is £132,378 over 25 years, with the previous rate of 6.39%; monthly repayments would be around £1,441.36.
At the new rate of 4.5%, monthly repayments would drop to approximately £1,081, representing a saving of about £360 per month.
This reduction and possibly further rate reductions next year could continue to attract enough new buyers to keep stock levels reasonable.
With inflation also continuing to ease, unemployment remaining low, steady wage growth, and a recent dip in interest rates, the market has seen more of a revival than a slowdown that can be attributed to high stock levels in the market.
How has the Top End of the Market Performed?
The top end of the market has shown significant activity as well. Below are some strong figures illustrating how the top end performed in Q3 2024 compared to the same period in 2023:
· 15.67% more properties are listed for sale.
· New listings have increased by 8.45%.
· A 13.11% rise in price reductions.
· Sellers returning to the market have increased by an impressive 42.74%.
· Sales agreed are up by 24.60%.
These figures highlight that the bounce-back is not limited to the core market—it’s been felt across the entire property sector. More new sellers have entered the market, and previous sellers are re-listing with renewed confidence.
Both sellers and estate agents have responded to the evolving market conditions, recognising the increased competition. Many unsold properties have seen adjusted asking prices, which has sparked greater buyer activity. With more competitively priced properties now available, the number of sales agreed in Q3 has increased significantly.
Challenges for Sellers
That said, sellers should still proceed with some caution. While there is quiet confidence across the market, and lower interest rates are making borrowing more attractive, affordability remains an issue for many buyers compared to just a few years ago.
Buyers today have a wider selection and are extremely value-conscious—if they don’t see the value, they are more likely to consider other options or wait for something better to come along.
This explains why we have also seen a rise in the number of properties withdrawn from the market, up almost 14%, and a notable 11% increase in sales that have fallen through.
The top end of the market shows promising signs of recovery compared to last year, but the serious and realistic sellers are seeing success. Those with well-presented, attractively priced, and professionally marketed properties benefit from this balanced market. Sellers who are overly optimistic or not particularly motivated are merely helping their competition by making other properties appear to offer better value.
Estate agents who are proactive in having challenging conversations with sellers, who listen, and who are willing to adapt to shifting conditions are the ones achieving sales and helping their clients move forward. Agents who blame the market, on the other hand, are not faring well in this environment.
Looking Ahead to the Autumn Budget
Now let’s focus on the upcoming Autumn Budget, the first under the new government, scheduled for 30th October. Labour has warned of tough decisions regarding taxes, spending, and benefits. Although we can’t predict the market response, I have analysed mortgage approval rates before and after the last ten budgets, starting back in March 2020, to gain a sense of potential trends.
On average, buyer activity has increased by 10.6% following a major budget announcement. When excluding the exceptional events during the pandemic boom and the Truss mini-budget, this average post-budget boost is around 2.9%.
There was a notable recovery after the infamous Truss/Kwarteng budget in September 2022—which led to a spike in mortgage rates and a 22.1% drop in approvals. The March 2023 budget saw mortgage approvals increase by 19.6%, and the last three budgets have each been followed by an average 12.6% rise in mortgage approvals.
In Conclusion
Elections and budgets both create uncertainty, which the property market typically struggles within the short term. However, historical trends indicate that market activity often increases following the budget announcement. With a strong performance in Q3 and a recent government change, the outlook for the end of the year appears favourable. The potential for further interest rate cuts this year and optimism for additional cuts possibly next year offers hope for a more stable market for a while longer. While we understand that the market will never be completely static, a reasonable degree of stability can help individuals plan their next move.
If you’re interested in discussing the local market, Putterills takes pride in offering our clients factual and accurate information to help them plan their moves confidently.
Call us to find out how to plan your next move.
