Housing market latest

The property market continues to find its feet after a difficult 2023, with buyers remaining cautious due to the higher cost of borrowing.  

Mortgage rates may not be as high as they were last summer, but they are still elevated. While most experts agree that Bank Rate will be cut this year, there is uncertainty surrounding when this will happen. The Bank of England reported an increase in agreed sales resulting in mortgage approvals reaching their highest level in 18 months in March.  

Price sensitivity remains among buyers, causing a slight dip in house prices in April, according to Nationwide. However, property experts Savills still envisage growth of 2.5% in 2024, and buyer confidence is expected to pick up once interest rates fall. This should close the widening gap between supply and demand, as sellers are currently returning to the market at a faster rate than buyers.  

Annual rental growth across the UK was 6.9% according to Zoopla, with Scotland and the North East regions showing growth rates of 9.6% and 9.3% respectively.  

Dip in prime London residential market

The prime market has been feeling the effects of higher mortgage rates, with the capital experiencing a significant slump.

According to data from Knight Frank, annual price growth in prime central London fell to -2.6% in April – the lowest figure in three years. Prime outer London did not fare as badly, with a smaller annual decrease of -1.2%. Knight Frank speculated that the weak growth may have been exacerbated by recently announced rule changes for individuals with non-domicile tax status.  

On a positive note, supply in London has risen, with instructions rising by 10% between January and April of this year.  

Affordability challenges in southern England

The divide in market activity between the south of England and the rest of the UK is becoming more evident. 

The disparity can be traced back to the 2008 global crisis; the London property market bounced back afterwards and took southern England with it. By 2014, house prices in the capital were increasing at an annual rate of 20% according to Zoopla – an exponential growth rate unmatched by the rest of the country.  

As a result, there is now significant disparity in housing affordability across the UK – data from USwitch shows that, in 2023, the average first-time buyer in Greater London had a deposit of £108,848. This is over three times more than those buying in the North East, who put down an average deposit of £29,740.  

Zoopla’s Executive Director of Research, Richard Donnell commented, “With mortgage rates unlikely to get much lower in the short term, income growth is going to have to do the hard work in resetting affordability across southern England.”

All details are correct at the time of writing (22 May 2024)

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