Matthew Henderson
Associate Director, Residential Research
On analysis of the market, Strutt & Parker maintains its previous house price forecasts of between 0 and 5% growth for the UK and with the same growth for Prime Central London for 2024.
The property consultancy anticipates that the housing market will see a boost in transactions and values in the second half of 2024.
The time to sell a home has been increasing since early 2022, when interest rates started to rise, a sign that demand was slowing. Since January, when this metric peaked, the ‘days to sell’ have started to reduce. This is an indication that demand is picking up pre-the base rate cuts and is a positive sign for the rest of the year. Even over the last year UK house prices grew 1.1% to Q1 2024, the first time we have had positive annual growth since Q4 2022. The resilience of house prices, and the positive indicators for demand are the main reasons our forecasts for 2024 are retained at 0% to 5%.
Matt Henderson, Associate Director in Research at Strutt & Parker comments “The uncertainty that hung over much of 2023 finally seems to be clearing and we have a more certain year ahead of us with mortgage rates expected to track downwards in the second half of the year. However, the market still proves to be sticky with many seeing the improved outlook for the latter half of this year and are sitting on their hands.”
“This may seem like a wise idea, but it is worth looking at how this may play out in more detail. As the market picks up in the latter half of the year, stronger demand will likely place an upward pressure on house prices. Therefore, it may be prudent to consider if the wait for the anticipated lower mortgages is cancelled out by a slight increase in values, especially as any mortgage rates falls later this year are unlikely to be especially dramatic. For those looking to get on the housing ladder, who don’t have a home to sell, purchasing while the market is ‘cooler’ and refinancing at more favourable rates, next year or the following year, could be a more savvy course of action.”
Prime Central London sales values stayed flat at -0.1% in Q1 of this year, continuing the broadly stagnant trend; over the year to Q1 prices only moved by -0.7%. Agents report that the market is in a broadly similar position to this time last year in terms of exchanged contracts and pipeline, with buyers tentative in anticipation of potential rate cuts and the upcoming election. Agents expect the year to be fairly flat overall. Our 2024 forecast is retained at between 0% to 5% growth, and the cumulative forecast is also retained at 10% to 15% growth.
James Gow, Head of London Agency at Strutt & Parker says “High quality, best-in-class, houses and apartments continue to sell well, as they have been over the duration of this higher interest period.”
“Accurate price advice is essential, especially now, as buyers have more choice but quality sells. We are seeing a significant rise in activity levels in terms of offers and agreed sales as the Spring market gets underway and in some cases we are seeing competition from buyers.”
Letting volumes in Prime London have continued their positive trajectory, growing 15% on Q1 of last year with both the number of flats and houses being let in PCL increasing. This increased number of lets has been boosted by a pickup in supply in the market. This has led to a slowdown in increasing rents. PCL rents, in the year to Q1 2024 grew 2.6%, 11th consecutive quarter of growth. But in Q1 rents only grew 0.6% Our agents expect that rents will continue to grow, but at reduced levels, leading to our 2024 forecast of between 2% to 5%. With 10% to 15% expected in the five years to 2028.
Head of Strutt & Parker Agency, Guy Robinson concludes “All of our housing market metrics are up post-Easter. There has been a seasonal shift slightly earlier than expected. People have been waiting for interest rates to drop in late spring or summer. However, with inflation falling at a slower rate than hoped, some have pushed back expectations of when the Bank Rate will be cut. There is a sense now that people just want to get on rather than delay a move further.”
“Buyers still have access to reasonable mortgage rates in the knowledge they’re not about to reduce dramatically, or suddenly spike. We have a steady, robust housing market with green shoots; the number of offers accepted, coupled with a decline in the number of sales falling through points to increased buyer confidence as well as a healthy market. There was limited activity in the housing market last year. While buyer numbers are still relatively low, those that are looking are serious and are transacting.”