Half Year 2024 Market Update

The first half of 2024 has presented an intriguing landscape for the UK property market. Despite political and economic uncertainties and the backdrop of higher interest rates, there is a noticeable sense of positivity and resilience within the market. This update will delve into key aspects of the market, examining trends, challenges, and opportunities for both buyers and sellers.

Market Trends and Buyer-Seller Dynamics

The current market offers a good amount of choice for buyers, fostering healthy competition among sellers. This increased availability of properties is a positive sign, suggesting that sellers remain undeterred by economic uncertainties and are confident in entering the market. However, while a greater number of properties can attract more buyers, an excessive supply might lead to price reductions. Market conditions, therefore, highlight a crucial balance—sufficient property options to entice buyers without flooding the market. The aftermath of the mini-budget in autumn 2022 saw demand rise, indicating that buyers are adapting to the new economic reality. With the average base rate in the first half of 2024 at 5.25%, compared to 0.6% between 2019-2022, achieving similar sales numbers is a testament to the market's adaptability.

Interest Rates and Affordability

Lloyds CEO Charlie Nunn has noted that while interest rate cuts from the Bank of England are anticipated later this year, homeowners should not expect a return to ultra-low rates. The new normal for mortgage rates is projected to be between 3.5% and 4.5%, a significant increase from the 1.5% to 2.5% range experienced in previous years. The average asking price of properties with agreed sales in the first 6 months of 2024 is comparable to the same period in 2023, indicating that sellers should remain realistic about pricing. Despite rising demand, affordability is stretched, and buyers are cautious about overpaying. This cautious optimism is crucial for maintaining market stability.

Pricing and Market Adjustments

A recurring theme in the market is the need for sellers to adjust their asking prices. Properties that undergo price reductions are 1.35 times less likely to sell, take three times longer to sell, and are twice as likely to have the sale fall through or necessitate a change of estate agents. Therefore, accurate pricing from the outset is essential. Sellers who must reduce their prices should aim to do so within the first month of listing, with a meaningful reduction of around 5%.

Withdrawn Properties and Sale Durations

A significant number of properties—47.15%—were withdrawn from the market in the first half of 2024. However, this figure is declining as more sales are agreed upon compared to the first 6 months in 2023. This trend suggests that fewer properties are being withdrawn because buyers are increasingly being found. Despite this, approximately 25.12% of all sales still “fall through” (not going on to complete), underscoring the importance of thorough due diligence on buyers, their finances, solicitors, and the entire chain. The average sale currently takes 154 days to complete, according to Rightmove. Would a reservation agreement change these timescales? providing more stability in the transaction process.

Positive Outlook for the Future

The market's positive trajectory is supported by several factors. Mortgage approvals have remained steady or increased for seven consecutive months, with transaction levels following suit over the past five months. The Bank of England has paused base rate hikes seven times in a row, and inflation has dropped for four consecutive months, reaching its lowest point since July 2021. These indicators suggest that the market is moving in the right direction. Despite political changes, historical data shows that the UK property market has remained resilient through various economic challenges. Forecasts for the near future predict potential growth in house prices, particularly following the upcoming election.

Conclusion

In conclusion, in the first six months of 2024 market update highlights a resilient and adaptive UK property market. While higher interest rates and economic uncertainties pose challenges, the market's ability to attract buyers and maintain stable prices is encouraging. Sellers are advised to price their properties accurately and consider timely adjustments if necessary. For those contemplating a move, there is no perfect time to enter the market; personal needs and financial circumstances should guide this decision. The market's history of resilience and positive forecasts for the future provide a solid foundation for confident decision-making.

If you are thinking of making a move, contact us at movinghome@mchugohomes.co.uk or check out the value of your home in an instant at McHugo Homes Property Search.