As we move through August 2024, the UK housing market is showing signs of recovery, buoyed by recent economic policy changes and a growing sense of stability. Here’s a comprehensive look at the current state of the market, highlighting the factors influencing property values and buyer sentiment.
Interest Rate Cuts and Mortgage Rates
A pivotal development has been the Bank of England’s decision to cut interest rates for the first time since 2020. This move is aimed at managing inflationary pressures and has had a direct impact on mortgage affordability. Mortgage rates have started to decline, with major lenders like Nationwide reintroducing sub-4% fixed-rate mortgages, which are expected to bolster buyer confidence further as we head into autumn​ (moneyweekuk).
Market Confidence and Activity
The reduction in mortgage rates, coupled with greater political clarity post-general election, is injecting optimism into the market. Indicators such as mortgage approvals are stabilising around long-term trends, suggesting sustained momentum. Sales volumes are expected to increase, with the number of sales agreed upon already 16% higher than last year. Additionally, the average time houses are on the market is decreasing, a sign of an accelerating market​ (Fine And Country).
A rejuvenation of the market is expected, particularly in London and the South. These areas are showing signs of heating up, with an increasing share of homes selling above their asking price for the first time since 2016​ (Hamptons).
The adjustment in monetary policy is likely to encourage first-time buyers who have been side-lined by rapid increases in housing costs over the past few years. These buyers are eager to transition from renting to owning, spurred by the prospect of more favourable borrowing costs​ (Hamptons).
Property Prices
July saw a year-on-year increase in average property prices by 2.1%, marking the highest rate of growth in 19 months. (Nationwide) This is attributed to renewed buyer interest and competitive mortgage rates, making properties slightly more accessible. Furthermore, buyers are now paying closer to asking prices, indicative of a competitive market environment​ (Fine And Country).
Rental Market Insights
As for the rental market, the rate of increase in rental costs is showing signs of stabilization. The average cost of a newly let home in Great Britain rose to £1,337 per calendar month as of May 2024, marking a 6.3% increase compared to the previous year. This rate has been consistent for the past few months, suggesting a cooling trend in rental price escalation​ (Hamptons).
Inner London uniquely continues to see a decline in rental costs, with the average rent for newly let homes dropping to £3,003 per month, the lowest in over a year. This decline is accompanied by a significant 20% reduction in the number of new tenants compared to last year, indicating a cooling market in this region​ (Hamptons).
Housing Supply and Construction
On the supply side, there has been a slight downturn in the number of new homes being constructed, with a 11% decrease compared to 2022. However, the government remains committed to increasing housing supply, emphasising reforms in planning and infrastructure to streamline and expedite new housing developments​ (Fine And Country).
Doree Bonner International: Your Moving and Storage Partner
For those considering a move or investment in the UK housing market, Doree Bonner International offers expertise and support through our comprehensive moving services. Whether you’re relocating domestically or moving internationally, our professional team is equipped to manage all aspects of your move, ensuring a seamless transition into your new home. Our services include professional packing, secure transport, and storage solutions, all tailored to meet the unique needs of our clients in a changing market landscape.
While the UK housing market faces challenges, the outlook for the remainder of 2024 is positive, with potential for growth as economic policies take effect and consumer confidence rebuilds. Doree Bonner International is here to assist with every step of your property journey, providing expert advice and support to ensure your moving experience is stress-free.
