SPRING SUNSHINE
Spring has arrived, bringing sunshine to the housing market. There’s an air of cautious optimism as inflation cools and demand picks up.
INFLATION EASING
CPI inflation rose by 3.4% in the 12 months to February 2024, the lowest level in over two and a half years (ONS). As inflation nears its target and the UK takes its first steps out of recession, 61% of economists surveyed expect the Bank of England to start cutting interest rates in June. Just under half of the economists expected the bank would cut rates three times in 2024, with some placing more optimistic predictions of four or five cuts (City A.M.).
PRICES
This month, the average property asking price rose by 1.5% to £368,118, higher than the average historic March increase of 1.0% and the largest monthly increase in prices for ten months (Rightmove). Prices remain £4,776 below the May 2023 peak, and buyers are seeing a window of opportunity to buy, which alongside pent-up demand and the usual spring optimism is driving the market. The average discount from asking price to agreed purchase price has fallen from 4.5% last November to 3.9% in March 2024, the lowest level since July 2023, an encouraging sign of increasing buyer interest (Zoopla).
DEMAND
New buyer enquiries in the latest RICS Residential Market Survey stayed positive for a second successive month (+6% net balance), indicating a continued upward trend in buyer demand. 59% of agents anticipate the usual spring bounce in the sales market this year, with a further 22% expecting stronger levels than usual as a result of pent-up demand (Dataloft Poll of Subscribers). The number of mortgage approvals continues to improve month-on-month. There was a 7.7% monthly uptick in approvals, reaching 60,383 in
February, the highest level since September 2022 and 40% above the same month last year (Bank of England).
GAINING MOMENTUM
New sales agreed are 9% higher and there are 20% more homes for sale than at the same time last year, increasing buyer choice. More affordable areas are seeing the strongest growth in sales activity, with Yorkshire and The Humber, and the North West seeing rises of 11% and 13% respectively (Zoopla).
HMRC report that 82,940 sales took place in February, the highest level since September 2023. On a monthly basis there was an uptick of 1.2%, indicating gathering steam, and setting the stage for overall activity levels reverting to more stable pre-pandemic norms.
PRIME PROPERTIES
In the prime market, the average price of a property is £1,260,008, having moderated slightly by -1.5% year-on-year. The East Midlands (+0.8%), Yorkshire & The Humber (+0.6%), and the North West (+0.3%) are experiencing positive annual growth. There are tentative signs of improvement, with the UK as a whole seeing a 0.7% month-on-month increase.
The number of agreed sales in the top-of-the-ladder homes, typically less exposed to mortgage rates, is 18% higher than last year, compared to a 13% increase for the wider market. Buyer demand for these prime properties is also 12% higher than the same period last year, versus 8% for all properties (Zoopla).
£268,644
£832,000
£1,260,008
£222,095 £742,000 £1,198,376
£443,359
£1,180,000
£280,205 £848,000
£1,261,741