Matthew Henderson
Associate Director, Residential Research
Strutt & Parker anticipates that the housing market will see a continuation of the boost in transactions in across the UK as pent up demand returns to the market.
This will put an upward pressure on values in going in to 2025. Prime London has saw a trickier market in Q3 as discretionary buyers waited for the UK budget and US election to occur.
Matt Henderson, Associate Director in Research at Strutt & Parker comments “The national housing market has shown a solid recovery through mid-2024, with lower and more stable interest rates unlocking demand that has been building up over the last 18 months, particularly in the more mainstream parts of the market. Our data at Strutt & Parker indicates consistent month-on-month improvements across both Prime Central London and national markets. New buyers coming to the market looking to transact have been driving up offers and exchange volumes.
“However, the delayed budget from Labour did put a damper on activity, especially at the higher price points, and in Prime London. While the outcome may not be exactly what many had hoped for – there’s a sense that it could have been more challenging – buyers now have the clarity needed to make informed choices about when and how they want to re-enter the market.”
Prime Central London prices fell -0.7% in Q3, continuing the trend of broadly stagnant sales values. Agents report that transaction volumes are higher than this time last year, and they expect further transactions given the base rate cut. A short wait whilst buyers adjust to the changes and absorb the impact of the US election, which will likely mean a slower end to this year but a positive start for 2025. The number transactions in the £1m+ market in PCL grew 12% on Q2, driven by falling interest rates. This has caused the lower end of the market to grow more quickly; the above £5m market is the only price bracket that contracted in Q3.
James Gow, Head of London Agency at Strutt & Parker adds “We now head into Q4 with falling mortgage rates, albeit with higher taxes, but now the new political landscape has been unmasked; we expect buyers to move forward with long term plans, some multi-generational, with a better visibility of future headwinds and taxation.”
Letting volumes in Prime London have climbed to a new high since 2021, their positive trajectory, growing 31% on Q2.
This increased number of lets has been boosted by a pickup in supply in the market which has quelled rental growth. Rents on new lets came in by -0.3% this quarter. We are still forecasting positive growth of between 0% and 3% over 2024.
Deputy Head of Strutt & Parker Agency, Kate Eales concludes “We've seen a clear recovery in the national market, especially for properties under £2.5 million. This has been largely driven by buyers using mortgages, as interest rates have eased following two base rate cuts this year. We've also seen steady interest in properties over £5 million, where buyers seemed less concerned with factors like the Autumn Budget as well as the U.S. election, moving ahead confidently without waiting for those results.
That said, a big part of the market is still adjusting to elevated interest rates, and while lower base rates are bringing some stability back, a full return to confidence will take time. The re-election of President-elect Trump, and the resulting economic and inflationary pressures are likely to slow this process.”
Read the full report here.