Market update

At Phillip Arnold Auctions, we like to keep you up to date with everything that’s been happening in the property market. And, the good news is, as spring arrives, it continues to return to life. Rightmove reports that asking prices were up 0.9% in February and, after several months of rises, most of the major indices are now showing annual growth has moved into positive territory. Activity levels are on the increase, too, with the number of agreed sales up by 16% compared to the same period last year and by 3% compared to the more normal 2019. At the same time, buyer choice is also improving, with a 7% rise in new listings on Rightmove.

Tim Bannister Rightmove’s Director of Property Science says:

“We said that February would be an important indicator for the year ahead, and the question was whether the Rightmove Boxing Day bounce in buyer activity would keep its spring into March or lose momentum. It’s proved to be the former, with the number of sales agreed continuing to considerably outstrip last year. Early-bird Boxing Day buyers got a head start in cherry picking from a record level of new property choice and have now been joined by many other buyers also believing that 2024 offers the right market conditions to move.”

The drivers of all this increased activity are clear – buyers’ confidence is rising on the back of mortgage cost falls. However, mortgage rates are still some way above recent averages and there is uncertainty over when and how much they will come down. It means buyers remain cautious and some are waiting for the base rate to start falling before making a move. This more cautious approach means property is taking over two weeks longer (16 days) to find a buyer. At an average of 78 days, it’s at its slowest since 2015 and anything overpriced is struggling to find any buyers at all. In London, the average is even higher at 84 days.

First-time buyers (FTBs) are finding the conditions the hardest and, despite the soaring costs of rents, higher mortgage rates mean it is currently considerably more expensive to buy than rent for the average FTB. However, with an election looming, the government may be keen to give them a boost and it would be no surprise if they launched some sort of first-time buyer scheme in the coming months.

HOUSE PRICES AND STATISTICS

Of all the most up-to-date indices, only Zoopla’s annual price remains in negative territory and that is probably because it is running a month behind the others.

Nationwide: Feb: Avge. price £260,420. Monthly change +0.7%. Annual change +1.2%

Halifax: Feb. Avge. price £291,699. Monthly change +0.4%. Annual change +1.7%

Land Registry: Dec: Avge. price £284,691. Monthly change +0.1%. Annual change -1.4%

Zoopla: Jan: Avge. price £263,600. Annual change -0.5%

Rightmove: Feb: Avge. price £362,839. Monthly change +0.9%. Annual change +0.1% (asking prices on Rightmove)

BUY-TO-LET

Just as the housing market is warming up, so the rental market is continuing to cool down. Although the average rent was up by 0.2% to £1,262pcm last month, stretched affordability meant rents fell in 4 out of the 12 regions. And, as has been the case for some time now, they came down most in London, where they dropped by 0.5% to £2,070pcm. On an annual basis, the Capital’s rents were still up by 4.8% but that is compared to 7.4% across the UK and that figure has been coming down for several months. It is, though, a very mixed picture, with some London boroughs seeing falls rather than gains. Camden’s rents, for example, were down by 3.6% and Tower Hamlet’s by 1.8%. In contrast, Barking, Dagenham and Havering’s were up by 11.8% (source: Homelet Rental Index)

Despite the softening of rents, the supply of rental property remains challenging. There have been some minor improvements, but tenants are still having to compete for any available properties. Michael Gove is hoping that by removing the tax breaks from short holiday lets, some landlords may opt to put their properties onto the standard lettings market, but that remains to be seen and the numbers are not likely to be significant.

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