While January can feel like a long (and sometimes bleak!) month after the festivity of December, the housing market, by comparison, is enjoying a bit of a boost according to recent data.
Demand is up
The first week of 2024 saw buyer demand rise to 5% higher than the same period last year. However, properties coming to market are still outstripping this demand, which means sellers have still been required to keep prices competitive.
While the market experienced some volatility and uncertainty at the start of 2023 in the wake of the 2022 Mini Budget and with the Bank Rate continuing to rise, the start of this year may have brought some hope to those who were put off moving last year.
However, the level of demand is still 13% below the five-year average.
Confidence in the market improves
As well as demand being up on this time last year, sales agreed have also risen. Data released shows a 20% increase compared to the first week of 2023, highlighting an improvement in buyer confidence. The rise in the number of sales agreed isn’t exclusive to one area; it’s good news across the board as figures are up across all regions.
Although it’s difficult to predict how the rest of the year will look, since Christmas, Rightmove has seen nine of its 10 busiest days on record for potential movers getting a Mortgage in Principle to find out how much they could afford to borrow. This may be an early sign for a positive 2024, as many of those hoping to move look to get their plans in place now for the upcoming year.
The current situation
Mortgage rates have come down in recent months, something that will no doubt be welcomed by buyers and sellers alike. The average 5-year rate is currently 4.86%, a drop from the 6.11% peak seen in July 2023.
Overall supply is up 22% on last year.As this gives buyers more choice, and with many movers potentially needing to refinance onto higher rates, sellers may need to continue to keep property prices realistic.
That said, it’s been reported that the average property price rose by 1.3% in the last month to just under £360,000. While this isn’t unusual – prices typically rise from December to January – it’s the largest rise for January since 2020 and is more than double the 20-year average of +0.6%.
What will the rest of the year look like?
As mentioned, looking ahead is difficult and nothing is ever certain, but the data suggests a tentatively optimistic start for 2024.
With sellers needing to take market conditions into account, listing at a realistic asking price is expected to be necessary over the coming year.
But as house price falls begin to slow and if mortgage rates come down further, this would suggest a more positive outlook for the housing market compared to that seen since September 2022.