Hello and welcome to the third and final instalment of the Camden Chase Newsletter for 2024.
I will be reviewing what happened in the property market in November following on from the budget and comparing it to the November market of recent years. As well as the budget, we have also had a base rate drop, inflation rising, and Donald Trump getting re-elected, so lots to digest and I will do my best to review what it means for the property market today and going forward.
You would expect all of the recent events to be creating stormy conditions for the property market in a similar way that Storm Darragh has across the UK, at the time of writing. You could be forgiven for saying the past ten years has seen us in a state of permacrisis, which can also be said for the political and economic climate for the best part of a decade now, yet the UK property market is still standing.
It may surprise you that the number of properties for sale, new listings, and sales being agreed, are all up on November last year and also up on the average for the same period over the last six-years. Average asking prices and £ per sqft values have both increased for new properties entering the market and on sales being agreed, compared to November last year.
The number of mortgage approvals and transactions are also higher. Mortgage approvals were up 42.59% in October compared to last year, 4.12% higher than the previous month of September, the highest they have been since August 2022 and have now increased five months in a row.
Octobers completed transactions were 21% up on last year, 10% higher than the previous month of September and 3.25% up on the 10-year average. This is the highest they have been since August 2022 and also the first time they have exceeded 100,000 in one month since then.
This determination to get moved is evidenced by the fact we are on course for 1.1 million transactions in 2024, a 10% increase on 2023 and 1.15million transactions in 2025, which is just 50,000 shy of 1.2 million 50-year average.
Despite these strong results, the market still has affordability constraints, more competition between sellers, and sticky inflation. Whilst there are plenty of positives to report on, price reductions and fall-throughs continue to be an issue with both higher than the same period last year and the six-
year average.
This is costing those trying to move home lots of wasted time and a considerable amount of money as well. We partner with Gazeal who offer 94% certainty your property sale, or purchase, reaches exchange of contracts. The unique Reservation process provides Commitment to the terms agreed upon by the Buyer and the Seller, so both parties can proceed in the safest way possible. This ensures a fair and efficient process for all involved, offering protection against anyone who may not be truly committed. Please use this to contact us for more information about committed buyer agreements
The number of properties currently for sale, new listings, agreed sales, and average asking prices all went down in November when compared to the previous month of October. Whilst this is a typical seasonal trend towards the end of the year, it also highlights that we must not forget how price sensitive the current market is and that competition between sellers is at a 10-year high.
According to Rightmove, the 1.4% monthly asking price decrease was larger than the usual November drop of 0.8%,likely due to pre and post budget jitters. You could also argue that sellers are adjusting their expectations and becoming more realistic with their pricing.
This can also be evidenced by fewer properties withdrawing from the market and sellers remaining more committed to the process as opposed to just withdrawing from the market if they don’t get the price they initially set out to achieve.
Compared to last year there are also a higher number of sellers returning to the market who have tried selling previously and this again, highlights an increased desire to move.
As you will see from the graph below, improving market conditions, lower interest rates, pent up demand being released, and more realistic pricing has meant sellers are now achieving closer to their original asking price compared to the previous couple of years as we return to a more normal, pre-pandemic average.
However, as I’ve mentioned, more choice for buyers, steadying mortgage rates, and higher stamp duty bills could see the percentage of original asking price achieved reduce as we head into 2025 whilst cost-conscious buyers look for discounts as affordability continues to be stretched.
Speaking of heading into 2025, it should be a very busy first few months as the rush to beat the stamp duty deadline looms and estate agents sales pipelines being carried over are significantly higher compared to a year ago.
IN CONCLUSION
Income growth has been stronger than expected in 2024 and the latest data from OBR shows that disposable income has increased by 15% over the past two years. Nationwide have also reported household balance sheets are in good shape too with debt levels at their lowest, relative to household income, since the mid-2000’s.
This stronger income growth has repaired housing affordability, but in contrast, the purchase price and size of mortgage have declined for existing home owners as they adjust to higher borrowing costs.
Sellers need to appreciate that buyers are still adjusting their budgets downward due to their purchasing power not reaching as far and only those that price sensibly are securing a sale.
We are experiencing the expected seasonal slowdown as we head towards Christmas, but the market looks as though it will get off to a fast start in 2025 with plenty of choice on the market for would-be buyers and a rush to beat the stamp duty headline, causing increased movement across all stages of the property chain.
WHAT ABOUT UK MORTGAGE RATES?
We have seen the base rate come down twice in 2024 from 5.25% to 4.75% and mortgage rates for buyers have fallen by 1% in the last 6 months.
Rightmove currently reports the average two-year fixed rate to be 5.08% and the five-year fixed rate as 4.85%. Their figures also highlight the lowest two-year fixed rate to be 4.22% and five-year fixed rate as 4.10%.
The MPC met on 19th December and made the decision to pause the Base Rate, as expected.
Headlines last week have suggested the possibility of four reductions in 2025 that would bring the base rate down to 3.75%. This aligns with previous reports that predict quarterly drops to the base rate as the
caution of the market reflects the uncertain inflation outlook.
Mortgage rates have increased slightly in the wake of the Autumn Budget and the expectation is that they will remain relatively unchanged throughout 2025 as the markets have already factored in future drops to the base rate.
It has also been widely reported that lenders will innovate on how they address affordability for those taking out fixed-rate mortgages. This will help to support buying power and market activity throughout 2025 and 2026.
TO CONCLUDE
Wage growth, lower inflation, cheaper mortgages, and more choice have kept the market alive and helped 2024 to be a year of recovery that has seen activity levels increase to almost long-term averages.
This is expected to continue as we enter 2025, but incomes need to continue to rise faster than prices to help reset affordability and allow more households the budget to enter the market.
First-time buyers will be very important to the market as they will remain the largest buyer group, thus supporting housing chains and helping existing owners to make a move.
The price sensitivity in the market will not be going anywhere anytime soon as the market is mostly made up of needs based buyers as opposed to the aspirational buyers we saw when interest rates were at a record low.
THE VIP BUYERS CLUB
Another service we provide that other estate agents don’t, is a pro-active property search service called a “VIP Buyer Campaign”. We effectively act as a matchmaker by identifying off-market (not advertised) opportunities to help buyers find their dream home.
Since the last Newsletter (published in October) we have helped four different sets of buyers tour homes to potentially purchase that were not advertised or available through any other estate agent.
By using advanced technologies, we should be able to open the doors of at least one home that is not currently advertised, on Rightmove, Zoopla or anywhere else, for every buyer that benefits from the service.
WISHING YOU THE FONDEST SEASONS GREETINGS AND HAPPINESS INTO 2025
I hope you have enjoyed reading the latest and final Newsletter of 2024 and have taken away some valuable insights if you are considering moving home in 2025.
Thank you for reading. Merry Christmas and Happy New Year. Enjoy the festivities.
Yours faithfully,
Scott Henderson MNAEA – Managing Director
Camden Chase
P.S. If you know someone else who might benefit from having a conversation with us about the property market, please do feel free to recommend they talk to us, we would really appreciate it.
TL;DR – If you’ve skipped to the end, in a nutshell; following the budget, November was a very strong month for the property market with new listings, agreed sales, mortgage approvals, and transaction numbers all up on last year. However, we are experiencing the expected seasonal slowdown as we head
towards Christmas.
The market looks as though it will get off to a fast start in 2025 with plenty of choice on the market for would-be buyers and a rush to beat the stamp duty deadline, impacting home sellers at all levels.
