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Housing market past ‘peak pain’
By Vicky Dudbridge, director,
Savills Residential Development Sales
It’s been a rollercoaster of a year in the housing market, with rising interest rates and the increase in the cost of living making for a turbulent time.
Values appear to have held up slightly better than expected in 2023 as mortgage markets settled over spring and autumn. According to Savills research, annual falls will stand at four per cent by the end of the year, which will leave values down a total of seven per cent since the autumn of 2022.
Cash buyers have been the most active, with activity 3.5 per cent higher than the 2017-19 average. However, less activity among mortgaged buyers – most notably buy-to-let investors – means overall transactions are expected to be 20 percent down on 2022.
Savills is predicting the average UK house price to drop by a modest three per cent in 2024 as affordability pressures start to ease, with the expectation that the base rate will stand at 4.75 per cent by the end of the year.
Here in the South West we expect prices to follow the national expectation of a three per cent decline over the next 12 months – however less debt dependent markets may perform better. Given the proportion of cash-rich buyers in Bath, it may be that values here prove more resilient.
With the Bank of England expected to start cutting interest rates in the second half of 2024, this should give more capacity for growth from the end of next year – with our research forecasting prices in the South West to grow by an average 17.9 per cent over the five years. This would bring the average house price to £348,082 by the end of 2028.
We are expecting sales numbers to remain at around 1 million in 2024, rising to 1.16 million by the end of 2028 – slightly below a pre-pandemic norm of 1.2 million.
So what does this all mean for those who are looking to move next year?
Well, while the housing market appears to be past ‘peak pain’, putting your property on the market at the right price is paramount to a successful sale. Demand remains good for high quality property, especially from the downsizer market and cash rich purchaser.
First time buyers and those looking to upgrade and seeking a mortgage should start to see more competitive mortgage rates once interest rates start to reduce, and next year is a good time to look at your purchase options.
If you would like some advice on how the current market conditions may affect your move, do get in touch and we are always happy to provide advice and assistance.
