WINT ER 2023/24
E A S T M I D L A N D S M A R K E T U P D AT E
EAST M IDLANDS
£540,000
£705,273
+3.8%
£348
£1.8bn
222
MORTGAGE APPROVALS (SEP)
43,328
-10.9%
-32.5%
RESIDENTIAL TRANSACTIONS (SEP)
85,610
3.0%
-17.0%
GROSS MORTGAGE LENDING (SEP)
£18.6bn
2.2%
-28.7%
60,988
2.8%
-5.7%
244,830
-
-4.3%
NEW HOMES BUILT (Q323) NEW HOMES BUILT (ANNUAL)
2
P RE M I U M M ARK E T S
E AS T M I D L AN D S
LOOKING FORWARD
The UK housing market started 2023 against a difficult economic backdrop. However, the market has fared better than expected, with prices softening by less than predicted. Transactions are relatively low, but steady, and demand is slowly picking up. Although the outlook for 2024 may remain challenging, conditions are stabilising and brightening.
MOVING IN THE RIGHT DIRECTION Inflation fell sharply to 4.6% in the year to October, down from 6.7% in September, its lowest rate since November 2021 and the sharpest decline in three decades (ONS). The fall is mainly attributed to lower energy prices and is a welcome relief for the economy and the mortgage market. Interest rates are now expected to be at their peak and are forecast to fall to 4.7% by the end of 2024 (HM Treasury, Average of Independent Forecasts, November 2023). The Royal Institution of Chartered Surveyors’ latest home buyer series, while still negative, is at its most confident for six months.
We remain in a buyer’s market, with more properties available as the stock shortage driven by the pandemic moderates. The availability of homes for sale is now just below 2019 levels (Rightmove). Buyers are price sensitive and discerning. It’s worth noting that homeowners are significantly overestimating their property’s value, on average by 15% more than estate agents’ valuations, up from 11% in 2022 (Quick Move Now). Owners are having to price much more competitively to achieve a sale. Time on the market has also increased. In the East Midlands, properties are currently selling in 68 days, 28 days slower than a year ago (Rightmove).
PRIME MARKETS HOUSE PRICES IN CONTEXT Despite a softening during 2023, putting this in context, house prices are still 25% above September 2019, the last pre-Covid September (UK HPI September 2023). Prices in September remain almost unchanged from the same time last year, down just 0.1%. Furthermore, both the Nationwide and Halifax house price indexes show a return to month-on-month house price growth in October (+0.9% and +1.1% respectively). Mortgage approvals have seen a 9% improvement on the start of the year (Bank of England) but are still below the long-term average and a gentle price moderation is expected over 2024. However, growth is predicted to return, with cumulative growth of 5.8% forecast between 2025 and 2027 (HM Treasury, Average of Independent Forecasts).
Across the East Midlands, annual price growth in the prime markets is currently 3.8%, the second highest region across England and Wales. The average price of a prime market property here is £705,273. The prime market in Derby is currently seeing the strongest price growth. Prime market buyers are more sheltered from interest rate pressures than the wider housing market, often having more equity and being less reliant on mortgage finance. The proportion of cash sales has increased; 34% of the sales in 2023 to date have been cash purchases, up from 28% in the same period in 2019 (UK HPI, ONS Data to September 2023). Cash buyers often wield more power and get to the front of the queue, sometimes securing significant discounts on the asking price. The average price of a cash purchase was £274,535, 10% lower than the average mortgaged house price of £304,361 (ONS, UK HPI September 2023).
P RE M I U M M ARK E T S
E AS T M I D L AN D S
3
£410,000 £551,376 +1.2% £292
£520,000 £722,455 +3.9% £374
£593,000 £785,791 +3.3% £391
£540,000 £705,273 +3.8% £348
£486,000 £637,830 +0.7% £338
£836,000 £1,157,241 +2.4% £552
£775,000 £1,057,277 +1.1% £507
4
P RE M I U M M ARK E T S
£510,000 £692,661 +3.9% £353
£1,000,000 £1,453,036 +0.4% £610
E AS T M I D L AN D S
£1,670,000 £2,738,147 -6.3% £1,312
EAST M IDLANDS PREM IUM M ARK ET
£480,000 £633,339 +1.2% £352
£415,000 £539,130 +5% £287 £487,000 £632,006 +4% £291
£555,000 £735,614 +1.4% £365
£505,000 £684,581 +11.7% £344
£621,000 £815,953 +4.1% £365
£568,000 £750,927 +3.8% £343
£555,000 £715,198 +4.9% £352
£618,000 £798,388 +3.4% £350
P RE M I U M M ARK E T S
E AS T M I D L AN D S
5
EAST M IDLANDS PREM IUM M ARK ET
EAST MIDLANDS
9.6% 8.4% 7.2% 6% 4.8% 3.6% 2.4% 1.2% 0% OCT 2022
NOV 2022
DEC 2022
JAN 2023
FEB 2023
MAR 2023
APR 2023
MAY 2023
JUN 2023
JUL 2023
AUG 2023
SEP 2023
EAST MIDLANDS
£400 £350
£ 377
£300
£ 323
£250
£ 328
£ 348
£ 300
£200 £150 £100 £50 £0 DETACHED
6
P RE M I U M M ARK E T S
E AS T M I D L AN D S
SEMI-DETACHED
TERRACED
FLAT/APARTMENT
ALL PROPERTY
EAST M IDLANDS M AINST REAM M ARK ET
EAST MIDLANDS
16% 8% 0% -8% -16% -24% -32% -40% -48% SEP 2022
OCT 2022
NOV 2022
DEC 2022
JAN 2023
FEB 2023
MAR 2023
APR 2023
MAY 2023
JUN 2023
JUL 2023
AUG 2023
EAST MIDLANDS
£320 £280
£ 292
£240
£ 244
£ 245
£200
£ 207
£ 207
TERRACED
FLAT/APARTMENT
£160 £120 £80 £40 £0 DETACHED
SEMI-DETACHED
P RE M I U M M ARK E T S
ALL PROPERTY
E AS T M I D L AN D S
7
EAST M IDLANDS
£229,858 £540,000 £705,273
£130,951 £272,000 £379,200
£175,017 £325,000 £405,641
£218,264 £380,000 £470,977
£352,143 £722,000 £941,013
£240,447 £550,000 £714,387
2023-11-02