UK Housing Market Spring 2024

Confidence is slowly returning to the market with a rising number of approvals for home purchase mortgages. Figures from the Bank of England show that the number of mortgage approvals was up by 7.2% in January this year.

The number of UK transactions also increased in January totalling 82,000 sales, although the year-on-year transactions were 11.9% lower. (HMRC) Data from Savills states that ‘the biggest uptick in sales activity (+ 33%) was in the £300,000 to £500,000 property price band’.

Buyer enquiries for the month of January 2024 rose 7% from -3% in December 2023, with new instructions up 11%, reports RICS Residential Market Survey.

London has had the biggest increase in buyer demand at the start of this year. ‘The return to the office, wage increases, stable house prices and the slowing of inflation have all played their part in increasing buyer interest in living in the capital again.’ says Rightmove.

According to the House Price Index from HM Land Registry published on 20 March 2024, the average price of a property sold in January in the UK was £282,000. House prices grew 0.5% between December 2023 and January this year, and London house prices decreased by 3.9% in the 12 months to January 2024.

Rightmove’s report from 18 March 2024 states that the national average asking price of newly marketed properties is £368,118, up by 1.5%. This is the biggest rise recorded in the last 10 months. The average asking price of a property for sale for the same period in London was £686,844, which is a + 0.6% monthly change. The average period that takes to sell a London property is currently 73 days. 

Affordability remains an issue for many first-time buyers who continue to struggle to raise a deposit. The latest trend from UK lenders shows a unilateral move to adjust the rates as the Bank of England key rate stays at a high level for a longer period than expected. On 20 March 2024, the BOE Monetary Policy Committee (MPC) announced it had left interest rates unchanged at 5.25% for the fifth meeting in a row. As a result, mainstream UK lenders have been pushing up rates since the start of the year.

Currently, the industry leaders agree that with the rise in mortgage approvals and extended sales activity, modest growth in sales prices in 2024 is very likely. Still, the extended number of days that takes to secure a buyer highlights the market’s sensitivity. In those conditions, suggests the Righmove, ‘attractively priced properties are quickly being cherry-picked, but over-optimistically priced sellers are taking longer to find a buyer.’

UK rental market

The UK rents are growing faster than inflation although there have been some signs that the pace of increasing rents is slowing down. The latest data from ONS published this month says that average UK private rents increased by 9.0% in the 12 months to February 2024 (provisional estimate), higher than in the 12 months to January 2024. Private rent inflation was the highest in London: 10.6%.

Spring Budget 2024

Despite hopes from the housing market professionals, the 2024 Spring Budget didn’t announce any new scheme or measure that would facilitate affordable borrowing and help first-time buyers with their deposits. Also, the existing stamp duty threshold set to expire in March 2025, has not been made permanent, as expected from property movers.

Instead, the Spring Budget introduced the removal of tax breaks for the furnished holiday lettings regime (scheduled for April 2025), the end of multiple dwellings stamp duty relief with effect from June 2024, and a reduction in the higher rate of property capital gains tax, from 28% to 24%. From an investor’s point of view, the Budget 2024 measures may temper future activity, but ‘they’re unlikely to be major game changers’.

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