Southeast Quarterly Market Report
Signs of green shoots are appearing in the property market. Buyers are returning, supported by falling mortgage rates, wage growth outstripping inflation, and a strong labour market. Read the highlights here with access to the full report.
With the Bank of England holding the interest rate at 5.25%, the consensus is that we are at the top of the rate rise cycle. Interest rate forecasts have been improving over recent months as the economic outlook brightens. Rates are predicted to start falling in the second half of the year, reaching 4.4% by the end of 2024. With inflation under control and forecast to fall to 2.2% by the end of the year, confidence in the housing market is improving.
First-time buyers were biding their time during 2023, however, it is expected that more first-time buyers will enter the market throughout the year, encouraged by the dual drivers of earnings growth and reduced mortgage rates improving affordability.
According to Moneyfacts, the average two-year and five-year fixed-rate deals have now been falling for six consecutive months. The availability of deals at the 95% loan-to-value tier has increased to 274 deals, its highest level since 2022, demonstrating that lenders are still keen to support borrowers with smaller deposits.
The start of 2024 has seen an upswing of new buyers, with agreed sales in the first six weeks of 2024 16% higher than the same period last year and 3% higher than in 2019 according to Rightmove. Average asking prices rose 0.1% year-on-year in February, the first annual increase since August 2023, an indication of growing market momentum.
The Bank of England revealed that the number of mortgage approvals rose for the fourth consecutive month to 55,227 in January, the highest level since October 2022.The Chancellor announced in the Spring Budget that property gains tax is to be reduced to 24%, which may encourage landlords to sell, boosting transactions.
The December UK House Price Index showed a mixed picture around the UK. However, the Nationwide index reported month-on-month house price growth in February, increasing by 0.7% as market momentum grows. On an annual basis, house prices saw a 1.2% increase in February, the first positive year-on-year growth since January 2023 according to Nationwide. This contributes to the emerging indications of recovery in the housing market. According to the HM Treasury Average of Independent Forecasts, prices are forecast to soften slightly, by-1.0% this year, but recover by 0.8% in 2025.