The property market is suffering from a ‘larger-than-normal’ seasonal slowdown as we head towards Christmas, latest data from Rightmove reveals.
The average price of property coming to the market for sale dropped by 1.4% this month (-£5,366) to £366,592 – the second month in a row that new seller pricing has fallen more than the norm.
And it seems last month’s pre-Budget jitters have turned into post-budget disappointment, creating new challenges for the housing market.
Despite the dampener of the budget the big picture of market activity remains strong when compared with last year.
SECOND RATE CUT
Rightmove says: “Since the Budget we have also had a second Bank Rate cut, with Rightmove’s real-time data identifying early signs of a subsequent boost in buyer activity.
“Sustained strong market metrics compared with last year and optimism for lower mortgage rates in 2025 have led to Rightmove forecasting a 4% increase in average new seller asking prices next year.
“Despite this prediction, the market is expected to remain price-sensitive and sellers are currently competing with a decade-high number of other sellers to attract a buyer.”
SLOWER-PACED
While more mortgage rate cuts are still expected during 2025 Bank Rate cuts are now forecast to be slower-paced, which could delay the affordability improvements that some movers have been holding out for.
Tim Bannister Rightmove’s Director of Property Science, says: “There’s been a lot of news to digest for home-movers over the last few weeks and it appears that the market may still be chewing it over.
“We had been seeing a drop-off in buyer demand, both in the lead-up to the Budget and in its immediate aftermath, as it was confirmed that there will be an increase to stamp-duty charges for most home-movers and second-home buyers, and some first-time buyers.”
But he adds: “A second Bank Rate cut and a boost of optimism regarding 2025 appear to have reversed this trend at least temporarily.
“Zooming out of these short-term trends, the big picture of market activity remains positive when compared to the quieter market at this time last year.
“This sets us up for what we predict will be a stronger 2025 in both prices and number of homes sold, particularly if mortgage rates fall by enough to significantly improve affordability for more of the mass-market.”
MORE POSITIVE
And he says: “The market is more positive than last year, with average asking prices currently 1.2% higher than in 2023, in line with our forecast of a 1% increase for 2024.
“We now predict that we’ll see a stronger year for prices in 2025. The signs are that the market momentum that we’ve been seeing this year will continue into next year, especially if mortgage rates drop to a level that gives greater affordability to some movers who have been waiting in the wings until now.
“However, we still expect some twists and turns next year. The speed at which mortgage rates come down next year will be key in determining activity levels for some of the market’s traditionally busiest periods, and sellers will still need to price temptingly enough to secure a buyer while the choice of homes for sale remains as high as it is right now.”
MARKET STIMULUS
Nathan Emerson, Chief Executive of Propertymark, says: “The Bank of England’s recent cuts to interest rates are likely to spur on more movement and further stimulate the market.
“With many buyers in England and Northern Ireland looking to move quickly before the Stamp Duty rises in April, we could see more people willing to accept heavier negotiations than normal, which could result in a small dip in the average house price.
“With the potential of a rise in the volume of transactions on the horizon we would anticipate a spiked shift towards the improvement of the overall health of the economy.”
NO OBVIOUS SPIKE
Kevin Shaw, National Sales Managing Director at Leaders Romans Group, adds: “Since the Budget and subsequent interest rate drop, there has been no obvious spike in sales numbers, although there has been a slight uptick in demand.
“Decisions are being made now before the buildup to Christmas, as buyers are more likely to get price flexibility from sellers now rather than in the New Year.
“This presents a good opportunity to negotiate, as there will certainly be more people looking in January after the Christmas break and usual surge in enquiries on Boxing Day.
“There is some uncertainty following hikes in National Insurance and the minimum wage. There has also been a lot of change in the last couple of weeks, so I think time will tell.
“It’s definitely an interesting time in the market.”
“It’s definitely an interesting time in the market but as we go into 2025 we expect market sentiment to improve further.”
TIME TO LIST
Alastair Cochrane, Group Sales and Operations Director at Stirling Ackroyd, says: “Now is a good time to list, as most people traditionally hold off at this time of year from coming to market, believing that buyer activity is lower.
“Committed buyers are still offering and purchasing, and for some sellers who have a property that could attract a first-time buyer, the window of opportunity is closing for them to use the stamp duty relief, so now would be a good time to take action.
“For investors, the increased stamp duty does present an initial barrier, and maybe those considering an investment property will recalibrate offer prices to take into account additional costs.
“Overall yields have increased with rising rents, which should give investors some comfort despite increases in stamp duty.”
TAKING A BREAK
Alex Caddy, Manager at Clarkes Estate and Letting Agency, says: “We have seen a few flashes of greater market activity, largely stemming from first time buyers, however overall, we’re seeing activity tail off before Christmas.
“This time of year does see some sellers taking a break from the market which gives an opportunity for those who persevere, as the amount of choice decreases for those active buyers.
“We have two camps of sellers at the moment – those without time pressure are holding fast with their asking prices, while others who reduce their price to attract a buyer more swiftly have more luck once they find a competitive price point.
“There are still many sellers planning their moves who are out looking despite not yet having a buyer themselves.
“There is certainly optimism that as first-time buyer activity picks up, this will create the much-needed knock-on effect to kick-start next year.”
MORE DEMAND
Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: “Although these are asking, rather than selling, prices, this month’s larger-than-usual drop confirms what we are seeing in our offices.
“There is more demand and sales agreed are up too but the increase in listings means buyers are spoilt for choice so sellers must be competitive if they want to stand out from the crowd.
“The Budget did not do the housing market any favours and may even extend the cautious tone as measures announced will probably mean mortgage rates remain higher for longer.
“First-time buyers are trying to snap up properties at better prices.”
“On a slightly more positive note, first-time buyers are trying to snap up properties at better prices which investors decide against due to higher stamp duty, before the lower rates which apply to them disappear next April.”
QUIETER TIME
Matt Thompson, head of sales at Chestertons, says: “The London property market is experiencing increased buyer activity this November.
“Traditionally, this is a quieter time of year in terms of property transactions but buyers feel more motivated to act now following the Autumn Budget and the Bank of England’s decision to lower interest rates for the second time this year.
“Depending on the property location and demand, some sellers are willing to enter price negotiations but those who are under less pressure to sell are still likely to insist on achieving their asking price.”
SLOWER GROWTH
And Tomer Aboody, director of specialist lender MT Finance, says: “More activity is leading to slower growth in asking prices, as buyers are in a stronger position with more stock available for sale.
“We are seeing some further push forward from the market with regard to mortgage rates, helped by the latest bank rate reduction, although further cuts might be slower in coming.
“While the Budget is now done, the market has yet to properly respond but in the short term as lenders continue to provide more affordable mortgages, we should continue to see the uplift in the market. As we stand now, if you’re looking to sell, price sensibly and attractively, chances are the buyer will be there.”
