Property Market Update | May 2024
With headlines in the news about stagnating house prices and rising mortgage rates, May has been a challenging month, with the cost-of-living crisis still biting homeowners. However, it’s not all doom and gloom! Owning a home is still beneficial, offering long-term living and financial stability.
Big News!
Prime Minister Rishi Sunak has announced that we’re heading to the polls on Thursday, July 4th, 2024.
This forthcoming general election could finally bring some stability to the property market, which is great news for buyers and sellers who've been dealing with a shaky few months. With inflation nearing the Bank of England's target and a potential interest rate drop on the horizon, things are looking up. Expect a busy second half of the year for property deals!
How Can First Time Buyers Get on the Property Ladder?
The end of April saw the release of the BSA (Building Societies Association) report which confirmed that first-time buyers currently face the most challenging conditions in seven decades to get onto the property ladder, with an increasing reliance on the Bank of Mum and Dad, or having two high incomes.
The report highlights that home ownership among young adults has been declining for twenty years but, while saving enough money to put down a deposit has long been difficult, the squeeze has been tightened in recent months because of mortgage interest rate increases.
It’s not hard to see why more young people are opting to move back in with their parents, with this now being the most commonly reported living arrangement for those aged 18-34. This is in stark contrast to the figures for 1997 which showed that those in the same age bracket were most likely to be living as a couple with children!
Many first-time buyers are undeterred though, with recent Bank of England figures showing that over the past three years, over a million mortgages extending beyond the state pension age of the borrower have been taken out. Many of those loans have been approved for applicants under the age of 30 as high mortgage rates lead people to opt for extended repayment periods to keep their costs affordable.
Twice the number of homeowners under 30s with ultra-long mortgages can be seen today when compared with two years ago, while the number of under 40s has also seen a 30% increase. It’s also clear that first-time buyers are adapting to higher borrowing costs by targeting smaller, more affordable properties. This adjustment is helping to maintain activity levels in the market with a steady flow of new buyers entering the market.
Base Rate Held at 5.25% - Good News or Bad News?
The Bank of England most recently held the base rate at 5.25%, despite predictions that there would be a cut.
Meanwhile, three of the UK’s top lenders announced they would be raising their rates on fixed deal mortgages. NatWest, Santander, and Nationwide are the latest three to follow their rivals who increased mortgage rates after expectations about the speed and extent of Bank of England interest rate cuts were scaled back. That’s the bad news!
However, a rate cut is expected, followed by further cuts later in the year. That’s the good news!
In more good news, the Office for National Statistics (ONS) has announced that the rate of inflation dropped to 2.3% in April, its lowest level in almost three years.
A Month of Ups and Downs!
May 2024 was a month of ups and downs in the UK lettings market! The rental market remains robust, with high demand pushing average rents to record levels which is positive for landlords and investors. However, some tenants are still struggling with the impact of the cost-of-living crisis and its knock-on effect on the number of homes available to rent.
Some good news for landlords has been released in Propertymark’s latest insights report , which shows signs of the rental market beginning to stabilise after a rocky period towards the end of 2023 which saw the percentage of arrears peak at 4%.
This month’s report reveals that since the start of the year, the number of tenants in arrears has been falling, and has now reached a low point of 2.5%, indicating that landlords can start to breathe a sigh of relief and look forward to less frustration over rent collection.
Has There Been An Increase In Landlord Confidence?
In a recent report from PayProp, their latest Rental Confidence Index revealed that an astonishing 54.5% of the landlords involved in their survey were going through the process of selling their properties!
It's not surprising, then, that half of all tenants who have moved during the last year have done so because their landlord took the decision to sell up. By contrast, the percentage of tenants who left their homes due to eviction stood at under 12%.
However, the announcement of amendments to the Renter’s Reform Bill has led to positivity amongst UK landlords. In a further poll commissioned by PayProp, the number of respondents who reported a negative view of the private rental sector fell compared with those asked the same question in 2022. Over half of landlords are now feeling more positive about the sector’s future.
In a smart move by first time buyers, 66.7% of properties being sold by landlords are being snapped up by first timers. But this does mean that the number of private rentals is dwindling – an issue that is now seeing prospective tenants fiercely competing to offer on properties.
Did You Know?
This year we are already seeing increased demand for sustainable homes. Energy-efficient features and eco-friendly designs are becoming more sought-after, alongside smart security, energy management tools and automated heating systems.
Maison Partnership is delighted to bring you our property market updates each month. If you are thinking of buying or selling a property please get in touch on 0333 242 3292 or email concierge@maisonpartnership.com.
