The property market is proving remarkably resilient in spite of challenging economic conditions. The major price falls predicted have not materialised, with serious buyers and sellers remaining resolved to move. Despite widespread house price moderation, recent improvements in mortgage rates have ignited some optimism in the market.
Month-on-month all major indices indicate house price cooling and this is expected to continue into 2024. At 1.8%, annual property price growth in the UK has moderated from 5.9% at the start of the year but remains in positive territory (UK HPI). House price softening and record rises in annual earnings have meant that housing is more affordable than a year ago. A typical home costs 6.7 times average annual earnings, down from 7.3 times a year ago (Halifax), although high mortgage rates mean it is still a stretch. The number of sales agreed is 15% lower than the same time in 2019, due to the tough economic climate and higher mortgage rates causing some to pause their plans for moving (Rightmove). For those who can, getting on the property ladder is an attractive option. Average asking prices for first-time buyers are down by 1% compared to last year, while average rents for comparable properties have risen 12% over the same period (Rightmove).
Easing inflation and forecasts of further falls have prompted lenders to cut fixed mortgage rates, despite a Bank of England Bank Rate rise in August. Many mortgage lenders are also reducing fixed rates to compete in the market and to drive higher business volumes. Latest forecasts are that interest rates will peak later this year and fall moderately throughout 2024, allowing buyers and sellers to plan ahead
with more confidence. 61% of active buyers in Wales were confident that they would purchase a property within the next three months, up from 60% in June (OnTheMarket). Despite the gloomy headlines over the last few months, buyer demand is holding firm. The volume of fall-throughs has reduced by more than 6% since March, in line with pre-pandemic levels, and time to exchange has fallen monthon-month since February, to 113 days in July (TwentyEA). Persistent cost-of-living pressures and the higher inflationary environment mean buyers are highly sensitive to pricing. It is vital that sellers price realistically, with 70% of agents surveyed saying that it is a buyer’s market (Dataloft Inform Poll of Subscribers).
The prime markets are proving resilient, with the average asking price in Wales at £648,269, up 3.8% from the same time last year. Barry and Newport are currently the best performing markets. Against a tough economic backdrop, buyer numbers are down across the UK, with a net balance of -45% in the latest RICS new buyer enquiries series. However, those still in the market are serious, with the best-in-class properties still seeing high levels of competition. The number of properties available for sale are 37% higher than the same time last year, and at their highest level in 12 months, proving that determination to move remains within the market (Propertymark).