Confidence Returns to the Property Market

The high property prices and the sharp rise in prices from 2021 to 2022 weren’t sustainable. With rising mortgage rates over the last 18 months, we expect a natural tip towards a more stable and realistic property market. We hope that as the market stabilises, many buyers will be encouraged to implement their moving plans. Although there may be a slight house price fall in some localised areas, it’s important to remember that many homeowners have seen a sharp rise in the value of their homes since the pandemic.

Despite the recent rise in the Bank of England base rate to 4.25%, mortgage rates are steadying. In addition, Zoopla has reported that there are currently 65% more homes for sale than in March 2022 – and this lack of demand was driving house prices to record high levels. With many more buyers and sellers active in the property market, 11% more sales are being agreed across the UK than in 2019.

Increased sales volumes

The mini-budget in October 2022 caused panic in the UK markets, and in the days following the budget, many lenders pulled their mortgage products, making buyers and sellers nervous to proceed with their plans. However, after the autumn statement, the market stabilised; since then, we have seen cautious improvements.

Sales volumes are increasing slowly in recent weeks at the same as in October. At present, agreed sales are 11% higher than in 2019, and demand from buyers is 16% higher. Homes are now selling faster in all regions of the UK.

This means that we are seeing more normal pre-pandemic market conditions after the post-pandemic property boom between 2020 and 2022.

Preferred property types

Those looking to move to a larger family home are in an ideal position because there is currently a high level of demand at the lower end of the property market. In addition, there’s more choice at the upper end, with many sellers pricing their properties much more realistically and a 4% drop in the asking price, which equates to £14,000. Homes at the bottom of the market are seeing 5% more sales than the upper end.

Those who are upsizing need to carefully consider the higher mortgage costs that will be inucrred. Until the economic outlook becomes more apparent and mortgage rates start to fall, there may be a slight fall in agreed sales this year.

On average, each estate agent lists 25 properties for sale – this is currently nine higher than last year.

Rental rates

There has been a spike in rental rates over the last year, with an 11% rise, continuing to support demand from first-time buyers. This group accounted for 1 in 3 sales last year.

Rental inflation further pushes first-time buyers to move to property ownership, despite the challenges of depositing and the higher mortgage rates.

This year, we expect rental growth to continue, with mortgage rates below rental costs in most regions of the UK, even with the recent rise in rates.

High property demand in Scotland

When looking at the property market in the UK, Scotland is one of the most affordable areas to buy a home. If you are considering moving and want to ensure you get the best deal, talk to our friendly team.