Darren Murphy gives a concise update and some key statistics on the UK residential market.
Firstly and, literally as I wrote this piece, the Government announced a date (July 4th) for the General Election. With a change of Government seemingly inevitable there will be much focus on what plans Labour have and how they will try and maintain the positive progress of recent months in the economy whilst demonstrating a strategy of change to appease a tired and disillusioned electorate.
House Price Trends:
- House prices fell by -0.4% in April, resulting in an annual growth rate of only 0.6% according to Nationwide.
- Affordability pressures continue to impact buyer purchasing power.
- Despite short-term fluctuations, updated forecasts predict 2.5% growth in house prices for 2024.
- The market remains sensitive to mortgage interest rates, which have been gradually rising since early 2023 but remain below their mid-2023 peak.
- Buyer confidence is boosted by mortgage rates staying relatively low.
Base Rate Cut and Market Sensitivity:
- The Bank of England (BoE) kept the base rate at 5.25% in May.
- Buyers await clarity on the first base rate cut, which will significantly influence demand.
- Supply has increased, with more surveyors reporting higher supply levels.
- The timing of the first cut remains uncertain, dependent on emerging economic data although this is likely to be before the autumn 2024.
Market Activity:
- Mortgage approvals reached their highest level in 18 months in March.
- Agreed sales have consistently been above pre-pandemic levels since the start of the year.
- Local areas show mixed annual house price trends, with Scotland being the only region with positive growth.
Rental Market:
- Annual rental growth across the UK remained strong at 6.9% in March.
- Regional variation persists, with high growth in Scotland, North East, and East of England.
Renters (Reform) Bill:
- Progress has been made on the Renters (Reform) Bill, which will end the Assured Shorthold Tenancy Agreement in England and Wales once necessary machinery is in place. This, of course, has now been delayed with the election announcement but with both major parties in favour of the key proposals, it is likely to re-emerge fairly quickly in a new Parliament.
In summary, while house price growth has slowed, the market awaits the first base rate cut, and rental growth remains robust. The UK property market continues to evolve, influenced by economic factors and policy changes.
Of course, we now know that a General Election will take place on July 4th 2024 and our lives will be dominated by much political posturing taking place in the interim.
It is likely that there will be an element of consumers “sitting on hands” during the election period and a moratorium on legislative progress (as Parliament will not be sitting).
Dependent upon emerging sentiment there may also be a greater reluctance for the Bank of England to reduce the base interest rate as quickly as previously expected.
