While interest rates remain high, confidence is returning to the market with further buoyancy expected as the political climate settles following the general election.
And Nicky Stevenson (main picture), Managing Director at Fine & Country, reckons that positive economic indicators point towards a brighter future.
She notes that the recent revisions to house price forecasts reflect a more optimistic outlook for the year.
CUT IN RATES EXPECTED
She says: “Inflation reached its 2.0% target in May, as reported by the Office for National Statistics (ONS), and a cut in the bank rate is anticipated soon. Consensus forecasts suggest the bank rate will decrease to 4.5% by the end of 2024, down from the current 5.25%.
“Although the reduction in mortgage debt costs has been modest so far, the combination of better interest rate forecasts and a brighter economic outlook has provided more room for house price growth this year.
“The latest forecasts suggest 1.4% house price growth to the end of 2024, a significant improvement to the -2.6% forecast at the start of the year.”
INCREASED CONFIDENCE
Looking at other metrics, Stevenson says that consumer confidence has increased for the third consecutive month in June, according to the GfK Consumer Confidence Tracker.
Rightmove have also reported that the average time to sell a property has decreased to 60 days in May, down from 78 days in January, marking the fourth consecutive monthly decline.
Meanwhile, mortgage approvals have also held firm, with 59,991 in May compared to 60,821 in April. Notably, there have been 28% more mortgage approvals in the first five months of this year compared to the same period last year.
Transaction levels are also on the rise, with HMRC figures showing a 17% increase in May compared to the previous year.
And a Dataloft by PriceHubble poll indicates that almost a third (32%) of agents report higher transaction levels than three months ago, with 11% seeing increases of over 5%.
MODEST PICKUP
Elsewhere, near-term sales expectations suggest a modest pickup in sales volumes over the next three months, while the twelve-month outlook is even more positive, with a net balance of +43% participants anticipating increased sales activity, an improvement from the previous month according to RICS.
Stevenson says: “Despite the general election, 95% of people who planned to move home stated that their plans remain unchanged. Over the past four weeks, the number of sales agreed has remained stable, 6% higher than the same period last year. Buyer demand has also stayed strong, now 5% higher than last year.
“The only election-related caution noted is a slight decrease in new sellers, particularly in the high-end market segment.”
POSITIVE ANNUAL GROWTH
And she adds: “In the prime market, the average property price stands at £1,242,092, a slight year-on-year decrease of -2.7%. However, prime markets in Scotland and the East Midlands are experiencing positive annual growth of 10.3% and 1.2% respectively.
“The latest data indicates a resurgence of confidence in the market. Despite the challenges posed by high interest rates and political uncertainties, the underlying fundamentals remain strong. The expected bank rate cut and improving economic conditions are likely to further bolster the market.
“We are particularly encouraged by the continued activity and positive sentiment among buyers and sellers, which bodes well for the remainder of the year.”
