Pre-election market update

With an election approaching, we at Phillip Arnold Auctions thought it might be a good moment to give you a market update.

Although many people are still waiting for the base rate to start coming down before making a move, May is traditionally one of the strongest performing months in the housing calendar. It has set price records in 12 of the previous 22 years and, this year, prices still made gains, but only relatively small ones. Rightmove’s property index rose by 0.8%, edging up to a record £375,131, which is just 0.6% higher than prices were this time last year.

As has been the case for some time, it was the top-of-the-ladder homes – four and five-bed properties - that saw the most growth. Annually, their prices rose more than twice as fast as the average at 1.3%.

Halifax’s figures, in contrast, showed there was a slight fall in May, but had stronger annual growth of 1.5%. Together, though, they paint a very similar picture. As Amanda Bryden, Head of Mortgages, Halifax, says:

“Market activity remained resilient throughout the spring months, supported by strong nominal wage growth and some evidence of an improvement in confidence about the economic outlook. This has been reflected in a broadly stable picture in terms of property price movements, with the average cost of a property little changed over the last three months.”

She goes on to say, “While homebuyers and those remortgaging will continue to respond to changes in borrowing costs, set against a backdrop of a limited supply of available properties, the market is unlikely to see huge fluctuations in the near term.”

We are, however, approaching an election. Traditionally, that means the market is likely to go quiet in the run-up. There will then be a hiatus for a week or two, after which the market tends to return to exactly where it left off.

HOUSE PRICES AND STATISTICS

Despite some variation in their monthly figures, the latest indices show annual price growth slowly converging to between +1% to +1.5%.

Nationwide: May: Avge. price £264,249. Monthly change +0.4%. Annual change +1.3%
Halifax: May. Avge. price £288,688. Monthly change -0.1%. Annual change +1.5%
Land Registry: Mar: Avge. price £282,776. Monthly change +0.7%. Annual change +1.8%
Zoopla: Apr: Avge. price £264,300. Annual change -0.1%
Rightmove: May: Avge. price £375,131. Monthly change +0.8%. Annual change +0.6% (asking prices on Rightmove)

BUY-TO-LET

Rent rises pulled up sharply last month, with monthly growth dropping from 1.6% in April to 0.2% in May. The average rent is now £1,297, a rise of 6.9% when compared to this time last year. In London, the slowdown was even more pronounced, with annual growth falling to 6%. During the same period last year, the Capital’s rental growth was in double digits.

As ever, there are some very wide variations between the postcodes. So, if you’re a tenant in Ealing (+16.4%), Barking, Dagenham and Havering (+13.0%), Croydon (+10.8%) or Richmond (+10.6%) it won’t feel much like a cooling market. (Source: Homelet's Rental Index).

According to Zoopla’s data, rental inflation is now at its lowest for more than two and a half years and they have said they expect the slowdown to continue for the remainder of 2024. They also note, however, that supply levels are slowly improving - the average number of homes for rent per estate agent has increased by almost a fifth (18%) over the past year, while demand has come down by 25%. The number of available properties, though, is around 33% below pre-pandemic levels and there are still as many as 15 households chasing every available rental home.

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