New listings remained stable in Q2 driven by robust supply in April and May, while June saw a contraction compared to the past three years, Spectre’s second quarterly report for 2024 reveals.
Buyer demand remained strong with properties sold STC showing both annual and quarterly growth.
The report says: “While interest rates and cost of borrowing remain high, the momentum in sales activity may be an indication of improved consumer outlook.
“The number of price reductions this quarter surpassed those observed in the same quarter of the past three years. While demand remains robust, these trends suggest heightened price sensitivity is prompting sellers to adjust prices more frequently.”
Falls-throughs increased both quarterly and annually – attributed to heightened mortgage rate volatility and the rapid turnover of available mortgage products.
Meanwhile withdrawals remained stable both quarter-on-quarter and year-on-year.
OVER-OPTIMISTIC
The report also reveals that just over a third (36%) of withdrawn listings were reduced before removal from the market, suggesting that while sellers are responsive to market conditions, their initial pricing strategies may have been over-optimistic, as reflected in the increasing average number of days on market.
Regional sales activity showed varying demand dynamics. The South West, East, and South East led with the highest sales-to-total-property ratios, while Greater London saw the lowest.
Looking ahead to Q3 2024, forecasts suggest a robust supply outlook moving into the second half of the year, accompanied by sustained growth in sales activity.
Sales are predicted to grow 6.5% from Q2 to Q3, with a 23% annual increase.
BASE RATE AND MORTGAGE RATES
But the report warns: “These forecasts will be dependent on the trajectory of base rate and mortgage rates, as well as house price changes. A more stable interest environment and falling mortgage rates could improve loan-to-income ratios in the second half of 2024, bringing a boost to buyer power.
“That said, economist predictions around UK house prices in 2024 are mixed, with some forecasting increases of 3%, while others predict a 2.3% dip.
“While affordability may improve, vendor prices may need to continue to correct to accommodate the heightened price sensitivity among buyers.
