The return of seasonality to the property market after the inconsistency of the last couple of years was in evidence in the run up to December, before a positive start to 2024 saw a 13% increase in new sales year-on-year.
The latest Propertymark Housing Insight Report, covering December 2023 identifies a fall in the number of sales agreed per member branch, from an average of 8 per month throughout 2023, to 4 in December; largely in line with 2021 and 2022 figures indicating a sense of seasonality to the decline.
The property market has traditionally followed a cycle of peaks and troughs in line with demand, with Christmas being quiet as “potential buyers stop house hunting and refocused on Christmas shopping” say Propertymark. The number of market appraisals undertaken by estate agents also drops with Propertymark’s report indicating appraisal per member branch decreased in the run up to Christmas from 16 in November 2023 to 10 in December.
Despite some doom and gloom from Propertymark on the supply of homes to market, Zoopla’s latest House Price Index suggests pent up demand from pre-Christmas, alongside falling mortgage rates, have given the property market a boost at the start of 2024, with buyer demand up 12% and sales agreed up 13% year on year. Indeed, Landmark’s latest Residential Property Trends report covering Q4 2023 suggests listings sit around the same number as Q4 2019, the benchmark for their reporting given it is the last time we had a relatively normal year before the impact of covid-19 and the stamp duty measures.
Commenting on the latest report, Richard Donnell, Executive Director at Zoopla described a “positive start to the year with all key measures of housing activity higher than a year ago, including the fact that sales agreed are higher than a year ago across all regions and countries of the UK
“The fall in mortgage rates has led to a rebound in buyer demand and sales following a weaker second half of 2023 when many movers put decisions on hold.
“This improvement in activity will support sales volumes which, at one million, reached an eleven year low in 2023. We don’t see these trends as a precursor to higher prices in 2024 as it remains a buyer’s market. Sellers looking to move should be encouraged by these early signals of activity but buyers remain price sensitive and focused on value for money. Over-optimism by sellers could quickly stall the current improvement in market activity.”
According to mortgage aggregator Twenty7tec the total number of purchase mortgage searches in January 2024 surpassed the whole of January 2023 on Thursday 25th, making it the busiest ever January market. With much publicised mortgage rate reductions driving demand. The latest Rightmove weekly mortgage tracker shows the average 5-year fixed mortgage rate is now 4.67%, down from 4.85% a year ago; with the average 2-year fixed mortgage rate now at 4.98%, down from 5.16% a year ago
Set against this positivity though is the news in recent weeks that inflation increased unexpectedly; an issue that is unlikely to see interest rates come down as quickly as previously hoped, with some lenders responding by increasing their mortgage rates. Albeit, says Matt Smith, Rightmove’s mortgage expert
“This doesn’t change the big picture that overall, average rates continue to trend downwards, with further reductions in this week’s data, and more expected to come, with those looking to take out a mortgage soon likely to see much more attractive deal on offer for them than at the peak six months ago.”
Weighing in, Nathan Emerson, CEO of Propertymark suggests that the overall picture is positive:
“An increase in house sales should give people the confidence to sell their properties again. As the Bank of England chose not to increase interest rates before the end of 2023, consumers should feel positive that borrowing costs are not going to increase for them. The next Monetary Policy Committee in February could be an opportunity for the Bank of England to cut interest rates and stimulate growth in the housing market now that inflation is not at the levels we witnessed at the start of last year.”
