Are property prices likely to change this year in Harborne? A home owners view

Economic uncertainty, higher interest rates, reduced buying power, and lower buyer demand meant fewer transactions took place in 2023.

The mismatch between buyer and seller expectations is also evidence as to why there has been fewer transactions with the discount on asking prices achieved the highest it has been since 2019. 

The average asking price of a new listing to market in 2023 was 9.49% higher than those that listed in 2022 but the average sale price remained the same.

This shows that some sellers were too optimistic with their pricing and with buying power decreased this meant buyers were not as forthcoming to purchase what they perceived to be overpriced properties. This would also explain why the number of price reductions in 2023 was 25% higher than the 5-year average and 49.03% up on 2022.

According to research from Rightmove, properties that price too high to start with and end up reducing their asking price are 10% less likely to sell-that is a crazy stat, right?

The January Rightmove House index though highlights positive shoots in the market for the start of the year, reporting:

• Average new seller asking prices rise by 1.3% (+£4,571) month-on-month to £359,748, the biggest December to January increase in prices since 2020, though average prices are still 0.7% lower than at this time last year
• The number of new properties coming onto the market for sale is 15% higher than in the same period last year
• Buyer demand in the first week of 2024 is also 5% higher than in the same period last year*. However, competitive pricing from sellers is still vital, with the number of new properties coming to market outpacing the rise in demand
• The number of sales agreed is 20% higher than during the first week of last year, indicating a strong return of buyer confidence when compared with the unsettled post-mini-Budget period a year ago *Zoopla report a 14% year on year increase in buyer demand

Tim Bannister Rightmove’s Director of Property Science comments:

 “After a stop-start market in 2023, the initial signs suggest a smoother year for movers in 2024. More new sellers are now entering the market, and with more confident pricing. While the increased level of buyer activity that we’re also seeing may justify some of this increased pricing confidence from sellers, it’s important that sellers who are keen to find a buyer don’t get carried away with New Year enthusiasm when setting their price expectations. Elevated mortgage rates and the wider cost-of-living squeeze are still limiting buyers’ spending power. Accurate and realistic pricing for their local area is the recipe for success for sellers looking to get moving in 2024, and it’s been proven that over-optimistic pricing makes a move much less likely.”

The number of properties for sale and unsold at the start of 2024 is only 5.13% higher than the 6-year average of 2019-2024. 

With the number of properties currently for sale still at normal levels compared to recent years and buyer demand returning due to interest rates continually dropping at a steady rate (with the average 5-year fixed mortgage rate now at 4.86%, compared to the heights of 6.11% in July last year, and the best rates now sub 4%), it points to the belief that the worst of the market correction is behind us.

Prices should remain stable this year and transaction numbers should be higher than 2023 as long as inflation and interest rates continue to come down.

Are you planning a move in 2024? Feel free to reach out on 0121 5170251 or andy@mchugohomes.co.uk for market insight specific to you and your home.

Andy McHugo