”No spring nor summer beauty hath such grace as I have seen in one autumnal face” – John Donne
Following a generally quieter market in the second and third quarters (albeit a good one for Artistry – we improved our market share in our core areas and expanded into new), there’s a positive outlook as we bask in the comfort of our cosy fires, our much-loved Agas, or our highly insulated modern homes. Nationwide and Halifax, two of the UK’s largest lenders, have reported that house prices increased between September and October, and in a recent Q & A, the Bank of England’s Chief Economist, Huw Pill, suggested that the base rate could drop below 5% next year following further falls in inflation. With the Bank of England holding the base rate at 5.25% over the last two months, lenders have been reducing mortgage rates in recent weeks, with some brokers expecting sub-5% products to be offered soon, increasing affordability for new buyers and those remortgaging.
There are several respected house price reports to which we refer. Halifax and Nationwide use their own customer data, whereas the Office for National Statistics (ONS) has sight of more complete data from HM Land Registry, Land and Property Services Northern Ireland and Registers of Scotland, thus considering all UK residential transactions including, importantly, cash purchases, which account for between 25% and 40% of the market depending on region.
In their release on November 7th, Halifax reports an increase in house prices from September to October of 1.1%, breaking a run of six consecutive small monthly falls. On an annual basis, they say prices are down 3.2%, an improvement on September’s 4.5%. Whilst they caution that the monthly increase is more a result of constrained supply than improved demand, they point out that “the current picture should continue to be seen in the context of the longer-term house price trend as, on average, prices remain around £40,000 above pre-pandemic levels.”
Nationwide similarly reports that house prices rose in the month to October by 0.9%, with the annual rate of house price growth improving from -5.3% to -3.3%. Due to continuing affordability pressures, mortgage approvals are well below the levels in the same period of 2019 (the year that is widely considered the benchmark, rather than the more abnormally buoyant markets of the subsequent three years), so prices and activity are likely to remain subdued for a while, although “a combination of solid income growth, together with modestly lower house prices and mortgage rates, will gradually improve affordability over time.”
The ONS, in their latest release, reports that average UK house prices increased by 0.2% in the 12 months to August 2023 (provisional estimate), down from 0.7% (revised estimate) in July 2023. In England, average house prices remained little changed at £310,000, but decreased in the East in those 12 months by 1.6%, and in the South East by 0.6%.
Finally, Rightmove, whose House Price Index arguably best gauges market sentiment, says that new asking prices increased by 0.5% in October, the lowest October increase for some time, but that the number of new enquiries for each home is 8% higher than in 2019. Given transaction numbers are still lower than in 2019, Rightmove says that new sellers need to capture buyers’ attention with a competitive price from the first day of marketing, as starting too high and reducing the price later damages the chance of a sale.
In summary, with recent increases in house prices, reduced supply, and slightly lower mortgage rates than earlier in the year, the remainder of 2023 could provide a decent opportunity to sell and, as lenders seem set to lower rates further, Q1 2024 will likely see increased transactions too. Increasing confidence amongst would-be sellers could lead to more property coming to the market, providing more choice for movers. Bear in mind, the latest monthly house price growth has mainly been driven by reduced supply rather than increasing demand, so we still encourage sellers to set realistic asking prices, on which we will obviously advise.
We know of many people who will list their own homes if the right property comes to the market for them to move to. Allowing viewings from this pool of potential buyers, as well as those with homes that have already sold or on the market, is now sensible, rather than restricting access to only those ready to proceed. Given more people now need to list and sell their own homes if they are to move, the time it takes to agree a sale can be a little longer; those wishing to move in the first half of next year should, therefore, consider entering the market now.
If you’re thinking of selling a unique home and would like advice specific to you, considering that unique homes don’t necessarily track the market exactly, please contact our office to arrange a free market appraisal. If we don’t talk over the next couple of months, we hope you and your families have a super end to the year, and we wish you all a very happy Christmas.
Produced 9th November 2023