There’s a noticeable shift in sentiment within the property market as recent data from various sources paints a picture of “cautious optimism”, signalling a potential return to growth in the housing sector.
According to Rightmove’s weekly mortgage tracker, mortgage rates have seen an upward trajectory over the past year. The average 5-year fixed mortgage rate now stands at 4.84%, up from 4.49% a year ago, while the average 2-year fixed rate has climbed to 5.22% from 4.82%. Despite these increases, the demand for mortgages remains robust, with new buyer enquiries experiencing a notable uptick.
Inflation seems to be easing, with CPI rising by 3.4% in the 12 months to February 2024, its lowest level in over two and a half years. This downward trend, coupled with anticipation of interest rate cuts by the Bank of England, has injected a sense of positivity into the market. Economists surveyed by City A.M. are forecasting potential rate cuts starting in June, which could further stimulate buyer activity.
Despite the challenges posed by inflation and interest rates, property prices have shown resilience. Rightmove reports a 1.5% increase in the average property asking price to £368,118, marking the most significant monthly rise in prices in ten months. Zoopla’s data also reveals a narrowing gap between asking and agreed purchase prices, indicating growing buyer interest.
The Royal Institute for Chartered Surveyors (RICS) Residential Market Survey suggests a sustained positive trend in new buyer enquiries, while mortgage approvals surged by 7.7% month-on-month in February. Additionally, there’s been a 20% increase in homes for sale compared to the same period last year, providing buyers with more options.
In the prime property market, despite a slight year-on-year decline in average prices, certain regions are experiencing positive growth. The number of agreed sales in top-tier properties is outpacing the wider market, indicating a robust appetite for luxury homes.
With sales activity showing signs of gathering momentum, the stage is set for a potentially vibrant spring season in the housing market. Increased buyer choice, coupled with the resurgence in prime property sales, paints a promising picture for the overall health and vitality of the UK housing market. Nicky Stevenson, Managing Director of Fine & Country, said:
“The easing inflation and expected interest rate cuts are positive indicators for the housing market. Lower interest rates could stimulate more buyer activity and further bolster the momentum we’re currently witnessing.”