801, 000 £ 1, 190, 947 - 6%
652 £ 35. 5b n 14, 517 M ORTGAGE AP P ROVALS (SEP )
DENTI AL TRANSACTI ONS (SEP )
FAVOURABLE MARKET CONDITIONS
As we enter the final months of the year, market conditions are favourable. Activity levels remain strong despite some nervousness ahead of the Autumn Budget and further activity should build from here now that uncertainty is behind us.
ECONOMIC OUTLOOK
Inflation continues to cool, rising by 1.7% in the year to September, down from 2.2% in August*. Looking forward, the OBR expects inflation to remain close to or slightly above the Bank of England’s 2% target until 2029. Following the Autumn Budget, 80% of investors still expect a Bank Rate cut at the next Bank of England meeting in November*.
While the broad path of mortgage rates has been towards lower rates, it has been a little less clear cut over recent weeks, with some lenders continue to drive new business volumes with competitive rates but some lenders pulling back from the market a little, adjusting their rates upwards marginally. It will take a little time for markets to establish the impact of the budget on long-term interest rates but the anticipated further November cut in the Bank Rate will be a welcome further sentiment boost.
PRICE RISES
Although kept in check by still constrained affordability and improved supply levels, property prices are edging up. Price growth was 1% in the year to September 2024; and is expected to be 2% by the end of the year*.
In the prime market, the average price of a property is £1,190,947, having softened by 6% year-on-year.
ROBUST ACTIVITY
Despite some uncertainty in the run up to the Autumn budget, activity levels remain robust. Mortgage approvals have increased for the fourth consecutive month, reaching 65,647 in September, a level not seen since August 2022*. Relatively lower mortgage rates are helping to boost sales. There were 332,200 sales agreed across the UK in Q3 2024,
23% above the same period last year. While 2023 was a low base to compare with, Q3 2024 sales were also 7% ahead of the same quarter in 2019*.
BUYER’S MARKET
Despite stronger housing market activity, the number of new properties reaching the market and the time taken to sell are both rising, leading to a boost in available homes for sale. Supply has reached its highest level since 2014 and is 12% higher year-on-year, putting buyers in control*. With more choice and buyer affordability still stretched, sellers must recognise the continued price sensitivity and price competitively to achieve a sale. Offers continue to be at a discount to the asking price: reported by 91% of estate agents in a recent poll with 28% over 5% below*.
THE AUTUMN BUDGET
The Autumn Budget provided a mixed outlook for the property market. The major tax change for housing was an immediate increase in the stamp duty surcharge for second homes and buy-to-let investors, rising from 3% to 5%. This may potentially deter some from completing already agreed property deals or lead to some renegotiation on prices. For the prime second homes market, this tax change will be an extra reason to expect continued price sensitivity over the coming months.
£1 billion in funding has been announced to address cladding safety, a welcome contribution to this significant and longstanding concern of the sector. Alongside other large-scale investments, £5 billion has been announced for housing, which guarantees to boost supply.
*ONS, Reuters, Zoopla, Bank of England, TwentyCi, Rightmove, Dataloft by PriceHubble poll of subscribers
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