HOUSE PRICES UPDATE: Pent-up demand is starting to show
Property market expert, Kate Faulkner, says the worst of house price falls are likely over and activity is running at pre-pandemic levels.
Looking at today’s average prices is interesting. Although they have hardly moved for the last few months, property prices have recovered from the small falls we have seen over the last 18 months to their 2022/23 highs.
The other good news is that according to Zoopla, housing market activity is running above pre-pandemic levels.
Another good guide to property price performance is Zoopla’s latest data on asking versus agreed prices. During a downturn, the margin tends to widen and narrow when prices are on the rise and people are competing to purchase a property.
During the height of the market in 2021, the price offered versus asking were pretty similar – around 100%, while they fell to 95/96% during the mortgage rate crisis.
Over time, prices on average, have only kept up with inflation increases since 2005.”
What this tells us is that although we will always get ‘boom and bust’ in the economy and in the property market, it does appear that market falls are getting smaller versus the 20% falls we’ve seen in past recessions. Equally though, house price rises are getting smaller too. Although there was a spike in prices during the pandemic, over time, prices on average, have only kept up with inflation increases since 2005.
Property price and market indices headlines
Political certainty and potential rate drop bode well for Autumn market
“Average new seller asking prices drop by 0.4% this month to £373,493, a bigger July drop than usual, as new sellers try to cut through the distractions of the General Election, sporting events and summer holiday season with a tempting price.”
Market activity increases despite burdensome bank rate
“Asking prices nudged up 0.2% during the last month across England and Wales (the sixth consecutive monthly rise) and are now up 0.7% compared to July 2023.”
Buyer demand steady over the month while the near-term outlook appears to be brightening
“Respondents increasingly anticipate market activity will gain momentum in the months ahead.”
House price growth edged up in July
“UK house prices rose 0.3% month on month in July.”
UK house prices rise in July
“House prices increased by +0.8% in July, following three relatively flat months.”
Housing market steady ahead of interest rate cuts
“Prices just 1.3% lower than a year ago.”
House price inflation static, still negative in south
“UK house prices edged 0.1% higher over the last 12 months, increasing by just £310 to £265,600.”
Insights from this month’s indices:
– Market activity has remained steady throughout the General Election campaign, and though there are signs that some would-be movers are waiting for the first Bank of England Base Rate cut, most are continuing with their moving plans:
– The number of sales being agreed remains encouraging at 15% above the same period a year ago, when mortgage rates were approaching their peak.
– The number of new sellers coming to market is a steady 3% above last year.
– Buyer demand remains stable overall, but there’s a slight drop (-2%) in demand in the particularly affordability-stretched first-time buyer sector.
– Despite the relatively large amount of stock for sale, market momentum remains relatively healthy as indicated by both the Typical Time on Market (median) for unsold property being seven days less than in July 2019 and our Market Turnover Indicator
– The total number of new instructions entering the market during June 2024 was 4% more than during June 2023.
– However, the current median time on market for unsold property in England and Wales is six days more than in July last year.
– Annual growth rate picked up to 2.1%, from 1.5% in June.
– Housing market activity has been holding relatively steady in recent months with the number of mortgages approved for house purchase at around 60,000 per month (see chart below). While this is still c.10% below the level prevailing before the pandemic struck, it is still a respectable pace given the higher interest rate environment.
– Annual growth rate of +2.3% is the highest since January 2024.
– Northern Ireland continues to record the strongest annual house price growth in the UK.
– Three English regions in positive territory; Wales near a turning point.
– London set to support national price performance.
– UK house prices are on track to be up to 2% higher over 2024.
– Buyers are paying a greater proportion of the asking price (96.8%), which has rebounded the most in London and the South East.
– The housing market continues to adjust to 4%+ mortgage rates with increased market activity rather than faster price growth.
– House prices are broadly flat over the last 12 months, but prices are higher across all regions and countries of the UK over H1 2024.
– The supply of homes for sale continues to grow and is 16% higher than a year ago – the average estate agent has 33 homes for sale.
– More supply and choice is supporting sales growth but will also keep price inflation in check.
