"A -2.2% decline is now projected, with the possibility of returning to positive growth next year, these revised forecasts reflect a more optimistic outlook for the housing market"
- Nicky Stevenson - Fine & Country
As the property market moves into the spring season, there is a palpable sense of cautious optimism among industry experts and homeowners alike, according to Nicky Stevenson, Managing Director of Fine & Country.
Nicky explains: “According to recent statistics compiled by Rightmove, the average new seller asking price experienced a 0.9% rise between January and February. The average prices are now up by 0.1% year-on-year, marking an uptick in market confidence.
"This increase follows a period of annual declines since August 2023, suggesting a potential turning point in the market. House prices have displayed more resilience against higher mortgage rates than previously assumed. Lloyds Banking Group has revised its house price forecasts, now anticipating softer price moderation throughout 2024 than was anticipated a few months ago.
She adds: "A -2.2% decline is now projected, with the possibility of returning to positive growth next year, these revised forecasts reflect a more optimistic outlook for the housing market.”
In tandem with these developments, as inflation heads in the right direction, Moneyfacts reveal that average rates on both two-year and five-year fixed-rate mortgages have fallen for six consecutive months. The average two-year fix is now 5.59% and the five-year is 5.23%.
A host of lenders are offering rates below 5% and even 4%, whereas in November 2023 no lenders offered fixed rates below this level. Mortgage rates are expected to remain within the 4% to 5% range, potentially moving a little lower over 2024, but this depends on the Bank Rate and if there is a cut later this year. The mortgage market exhibiting stability and accessibility could potentially fuel further growth in home purchases.
HMRC data revealed that transactions have increased by 1.9% between December and January, the first monthly rise since August 2023. According to Rightmove, agreed sales are 16% higher than the same period last year and 3% higher than in 2019. This may indicate pent-up demand, with a return to the market of buyers who had previously been delaying a move.
The surge in mortgage approvals in January, reaching their highest levels since October 2022 according to data from the Bank of England, coupled with a 7.2% increase in transactions between December and January, underscores the growing momentum in the housing market as it enters the spring season. This trend is further supported by Zoopla's report of a 21% year-on-year increase in the stock of homes for sale, indicating greater confidence among vendors and expanding options for buyers.
Stevenson says: "The data we're seeing points towards a more balanced and active property market compared to recent months. With increasing buyer demand, improved supply levels, and more favourable mortgage rates, we are cautiously optimistic about the year ahead.
She concludes: “Zoopla data reveals that the market is on track for a 10% increase in sales in 2024 compared to 2023, signalling a more robust year for the property sector. However, the importance of realistic pricing cannot be over-emphasised in ensuring successful transactions amidst this evolving market landscape.”
