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The UK property market bounces back

Despite the UK tipping into a technical recession in the last three months of 2023, data shows that the housing market is showing signs of steady improvement.

While the housing market lost momentum in 2023, impacted by high mortgage rates and a lingering cost of living crisis, new figures from property body Rightmove show that buyer interest is on the rise with the prices of homes put up for sale in Britain also rising in annual terms for the first time in six months. In fact, UK house prices rose by 0.7% in January, marking the strongest annual figure for the market since January 2023.

Below we break down why confidence seems to be returning to the UK property market.

Property prices are rising

Rightmove’s data shows that house sales in the first six weeks of 2024 are 16% higher than over the same period last year, and 3% higher than pre-pandemic numbers. House prices rose by 0.9% in February to follow annual falls in every month since August 2023.

This coincides with an uptick in activity of both buyers and sellers on Rightmove, with 7% more new listings coming to market than last year and a 7% upturn in the number of buyers enquiring.

Mortgage rates have declined

Between December 2021 and August 2023 the Bank of England raised the base rate 14 times from 0.1% to 5.25%, the highest level since April 2008, and the impact on the property market was widespread.These rates made it more expensive to borrow money and meant fewer potential buyers could afford mortgages.

In recent months however potential buyers have been able to take advantage of mortgage rates continuing to trend down, with investors becoming more optimistic that the Bank of England will lower rates in the years ahead.

Despite the UK entering a technical recession at the end of last year, the number of mortgages offered to home buyers went up from 49,300 in November to 50,500 in December, defying the normal seasonal downtrend. According to data from the Bank of England the number of remortgages approved also rose from 25,700 to 30,800 in the same period, while the interest rate paid on newly drawn mortgages dropped by 0.6% for the first time in three years.

Which areas are seeing the largest changes in property price?

Various UK regions and their associated property prices have responded differently to the cost of living crisis and the associated factors influencing buyer sentiment. A recent UK house price index from the estate agents Yopa reveals how different areas have been influenced. In London, house prices still remain the most expensive throughout the UK, with the cost of a property up 2.8% to around £682,000.

Scotland saw the average house price increasing by 4.2%, followed by Northern Ireland (3.4%), the North West (3.2%), the West Midlands (1.5%), Yorkshire and Humber (1.3%), and the East Midlands (0.6%).

The regions that saw prices decline were Wales (-0.2%), the North East (-0.9%), the South West (-1.5%), the East of England (-2.5%), the South East (-3.9%).

As the property market continues in an upward trajectory and shows signs of reliance despite the cost of living crisis, there are signs that challenges are on the horizon. According to Rightmove, “While the mortgage market has recovered its stability, there are growing signs that the room for lenders to reduce rates further is narrowing, and that rates will settle at elevated levels for the near future.”

This means that now might be the ideal time to move ahead with long-standing property and investment plans, but consultation with a market professional is imperative to ensure you move in the right direction for your personal financial and property goals. Tailor my Property’s network of property, finance and investment professionals will be able to assist you with assessing the market and moving ahead accordingly.


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