PROPERTY MARKET LATEST: Upward trend across the board
All the key metrics for a healthy property market show an upward trend of more buyers, more sales agreed and more supply.
On top of price rises, all the nation’s key metrics for a healthy property market show an upward trend: more buyers, more sales agreed, more supply coming onto the market, and therefore more properties for agents to sell. This is the ideal ‘virtuous circle’ that seriously helps drive the property market forward.
And, off the back of these figures, we will likely see a great start to 2025. The question is, though, whether this will be sustainable. Although probably not what everyone wants to be reminded of, Doug Shepard from Home.co.uk wisely warns: “Without a significant cut in the Bank of England base rate, 2025 could get very ugly for significant numbers of mortgagees and landlords alike.”
Landlords struggling due to increased costs (especially with a mortgage) and mortgage holders realising that rates are not coming down as quickly as hoped, could get caught. However, it’s important to remember some excellent research from Savills which showed that although tight, due to wage rises over the last few years, more people than expected could afford their home.
It’s also worth noting that the ‘collapse’ of first-time buyers hasn’t happened – as they were being assessed at 5-7% rates, many can still cope with the higher rates and are keen to buy to move away from the rental sector.
Overall, 2024 has been a far better year than previously expected and will hopefully mean we kick off 2025 if further confidence can be built into the market.
Property price and market indices headlines
Bank Rate cuts boost optimism for 2025 despite Budget pause
“Average new seller asking prices drop by 1.4% this month to £366,592, a bigger fall than the usual, seasonal 0.8% drop seen at this time of year, likely due to pre- and post-Budget jitters.”
Sales market activity continues to rise steadily
”Headline house price growth appears to be gradually gaining momentum.”
Only northern markets even close to real growth
“Asking prices indicate an anticipated seasonal decline of -0.3% since last month across England and Wales.”
Annual house price growth rebounds in November
“UK house prices rose 1.2% month on month.”
Average house price rises to hit record high
“House prices increased by +1.3% in November, a fifth consecutive monthly increase.”
Housing market returns to growth in 2024, supported by rising incomes and lower mortgage rates
“More sales and greater buyer confidence have fed into higher house price inflation which stands at 1.5% in the year to October 2024, compared to prices falling by 1.2% a year ago.”
Insights from this month’s indices
– +1.2% annual price change, in line with Rightmove’s end-of-year +1% prediction.
– Despite the dampening effect of the Budget, market activity remains stronger than last year as Bank Rate falls:
– The number of sales being agreed is still 26% ahead of the quieter market at this time in 2023.
– The number of new sellers deciding to move and coming to market is 6% ahead of the same period a year ago.
– Rightmove’s real-time data shows some early signs of a post-Bank-Rate-cut uptick in buyer demand, though we still expect activity to tail off as usual towards Christmas.
– Rightmove’s 2025 forecast is that average new seller asking prices will rise by 4%, our highest prediction since 2021, with lower mortgage rates releasing some of the pent-up housing demand and putting modest upwards pressure on prices.
– The market remains price-sensitive, and seller competition is at its highest level for a decade. Those keen to sell will need to offer a well-presented and well-priced home to attract buyers who are spoilt for choice and still affordability-stretched.
– Bank Rate cuts are now forecast to be slower-paced, so affordability may take longer to improve than previously expected.
– Annualised home price growth extends to 2.0%, driven mainly by capital growth in the North and Wales.
– Property turnover is currently higher than during most of the last ten years and Typical Time on Market remains significantly lower than in pre-pandemic November 2019.
– Such is the volume of property moving through the market that, despite a large uptick in new instructions in October, the total of unsold property fell significantly over the same period.
– The total number of new instructions entering the market during October 2024 was 14% more than during October 2023. The North West saw the highest regional increase, up by 21%.
– The price of a typical UK home rose by 3.7% year on year in November, a strong rebound from the 2.4% recorded the previous month and marking the fastest rate of annual growth for two years (November 2022). House prices increased by a robust 1.2% month on month, after taking account of seasonal effects, the largest monthly gain since March 2022. House prices are just 1% below the all-time high recorded in the summer of 2022.
– The acceleration in house price growth is surprising, since affordability remains stretched by historic standards, with house prices still high relative to average incomes and interest rates well above pre-Covid levels.
– Property prices are up +4.8% on an annual basis (vs +4.0% last month).
– Northern Ireland continues to record the strongest annual house price growth in the UK.
Positive employment figures and anticipated decreases in interest rates are expected to continue supporting demand.”
– As we move towards the end of the year and into 2025, positive employment figures and anticipated decreases in interest rates are expected to continue supporting demand. This should underpin further house price growth, albeit at a modest pace as borrowing costs remain above the average of a few years ago.
– House prices now just 1% below all-time peak.
– All regions and countries recording positive year-on-year growth, with the UK average at +1.5%, up from -1.2% a year ago.
– Housing market has now largely adjusted to higher borrowing costs.
– UK house prices and projected to rise by 2.5% in 2025, with a 5% increase in the volume of housing transactions, predicted at 1.15m.
– More buyers will pay higher stamp duty in England and Northern Ireland, which will act as a drag on price inflation.
– Mortgage rates are unlikely to change over 2025 but we expect lenders to innovate affordability assessments, supporting demand.
