"The UK property market will continue to experience volatility and regional disparities in performance. The announcement of the next general election is likely to exacerbate this instability, as new legislation and policies always create uncertainty."
- Daniel Gale - First for Auctions
In assessing the outlook for property auctions in 2024, it's crucial to look beyond interest rates. The real driving force behind the current state of the housing market is the cost of living – factors like salaries, and the prices of essentials like gas and electricity. These are directly impacting buyers' capabilities and motivations.
In the world of property auctions, the increasing and volatile cost of materials is a significant concern. This rise affects new construction and influences the attractiveness of auction properties often requiring renovation and remedial work. Typically, these properties need to be perceived as outstanding value to attract buyers and with squeezed margins as a result of building costs, we may see a decline in sale prices.
My prediction for 2024 is that bidder activity will likely remain consistent with the levels observed in Q3 and Q4 of 2023. In such an environment, sellers at auctions will need to be more strategic and realistic about their pricing to attract bidders and close sales.
Auction popularity
As we look towards 2024, the property auction market is poised to continue much as it has in the second half of 2023. The trend from 2023, in which we observed a 10% decrease in property prices over the full year and increased time from offer to completion on a conventional sale, is leading more sellers to choose the faster auction route.
They're seeking greater certainty and speed, especially in light of potential further decreases next year. This shift is a direct response to the lack of confidence still looming over the housing market, coupled with slow transaction time and persistent restrictions on the costs associated with home moving.
We have seen an increase in property investors selling at auction, typically either single-property landlords or large portfolio landlords heading into retirement and looking to exit the private rental sector as a result of increased costs.
This change is significant because investors who were previously looking to grow their portfolio are now not buying further properties as often, this shift in the investment market is illustrated by the rental yields investors are now looking for increasing month by month.
One of the most active purchase segments is first-time buyers, but they traditionally shy away from auctions. As a result, we're witnessing a growing gap between estate agent prices and auction prices.
In summary, while auctions are gaining popularity among sellers because of their speed and certainty, the buyer demographic is shifting, and the market is adapting to these new dynamics.
Announcement of a general election
The impending general election adds another layer of complexity to an already complex landscape in the UK property market. Political campaigns and elections historically create a national mood of uncertainty, influencing market sentiment and investor confidence.
This uncertainty, combined with other global factors like overseas military conflicts, could have inflationary effects, especially if energy markets are affected further, potentially putting upward pressure on rates again.
However, it's also important to note that the overall outlook for the UK housing market is showing signs of improvement, although it’s clear that the path ahead in 2024 will not be without its challenges.
Considering these factors, my prediction for 2024 is that the UK property market will continue to experience volatility and regional disparities in performance. The announcement of the next general election is likely to exacerbate this instability, as new legislation and policies always create uncertainty.
This period may see cautious behaviour from both buyers and sellers, leading to fluctuating market dynamics. Investors and buyers should brace for a year of cautious navigation through these challenges, with a keen eye on political developments and their potential impact on the property market.
