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The UK property market reflects resilience and stability in Q4 2023

As the year draws to a close, data reveals the UK property market is entering into a calmer and more stable landscape.

As the year draws to a close, the UK property market is entering into a calmer and more stable landscape. This is according to Nicky Stevenson, Managing Director of Fine & Country, commenting, “Based on the data, we seem to be entering a more settled landscape in the final months of the year. The market continues to display resilience in the face of the wider economic environment, with month-on-month property transactions fairly consistent, supported by committed movers and realistic pricing.”

According to data from Nationwide, house prices saw a 0.9% increase in October, marking the largest monthly rise in over a year. Stevenson adds, “Pricing sensibly remains key, as purchasers are cautious not to overpay. Rightmove data further reveals that 37% of properties have had their asking prices reduced since the beginning of the year. Good quality properties in sought-after locations continue to attract strong interest, with the average price of a prime property standing at £1,258,671. On an annual basis, there has been a slight softening of 0.8.”

The UK property market appears to be entering calmer territory with unemployment figures and inflation remaining same, and the bank rate being held at 5.25%. According to HMRC, property transactions have remained stable since June this year, although they are down compared to last year. The Royal Institution of Surveyors reports a decrease in homebuyer demand compared to last year, but it has improved since August.

Mortgage approvals dipped to 43,300 in September, below the long-term average. However, according to the Bank of England data, this is a 9% improvement from the start of the year. Although activity from mortgaged buyers is down, the number of cash buyers remains steady and is set to be the second-largest buyer group this year, following first-time buyers. Zoopla statistics indicate that cash buyers accounted for one in three sales in 2023, compared to an average of one in five over the last five years.

“Looking to next year, with anticipated falling interest rates and inflation tracking to reach its target of 2% in the first half of 2025, the property market’s momentum is expected to gather pace. Combined with pent-up demand and the usual springtime uplift in buyer interest, we anticipate a positive shift in market activity,” Stevenson comments.

Despite subdued demand, there are promising signs of recovery and green shoots appearing. Competition in the mortgage market is growing, and consumer confidence has reached its highest level since January 2022, according to the GfK Consumer Confidence Tracker. TwentyCi data reveals that property supply above £1 million has risen by 9% in the past year, albeit remaining below pre-pandemic levels.

Stevenson notes that despite facing significant challenges, the property market remains resilient, as demonstrated by relatively small price falls. Larger house price falls have been protected by low unemployment, growing incomes, and a small but positive growth in the economy. Mortgage lenders are assisting customers with refinancing, limiting the number of forced sellers.

“All eyes are now on the government’s upcoming Autumn Statement to provide a clearer indication of the UK economy’s outlook. Reports suggest that the government is considering an inheritance tax cut, with the potential to abolish it in the future. This news is particularly welcome for homeowners, as the current inheritance tax is charged at 40% for estates worth over £325,000, with an additional £175,000 allowance for a main residence passed onto children or grandchildren. Married couples can share the allowance, enabling parents to pass up to £1 million to their children with no tax to pay. With rising house prices over the long term, more people are becoming subject to the tax,” Stevenson concludes.