The latest UK House Price Index for May 2024 presents a dynamic yet balanced picture of the current housing market. You can take a look at it from Zoopla here: Zoopla House Price Index
Here are the main points you need to know if you are looking to sell or buy a property soon:
House Prices: A Static Outlook
The annual UK house price inflation is running at a slight decline of -0.1%, reflecting a broadly stable market. This marginal drop indicates that while prices are not surging, they are also not falling significantly. This stability is largely due to an increase in housing supply, which is helping to balance the market.
What does this mean?
For Sellers: With annual UK house price inflation at -0.1%, sellers may need to manage their expectations regarding price increases. Pricing properties realistically is crucial to attract buyers in a market where prices are stable.
For Buyers: Buyers benefit from a relatively stable pricing environment, reducing the urgency to rush purchases due to fear of rapidly increasing prices.
Regional Variations
House price inflation varies across the UK. Cities like Belfast are experiencing a positive inflation rate of +3.6%, while Ipswich faces a -3% decline. Southern cities, in particular, continue to see modest price falls, illustrating a north-south divide in the market.
What does this mean?
For Sellers: Sellers in regions with positive price inflation, may have more leverage and can expect better returns. Conversely, sellers in regions experiencing price declines, might need to be more flexible with their pricing and willing to negotiate.
For Buyers: Buyers in areas with falling prices might find better deals and more room for negotiation. In regions with rising prices, they may need to act more quickly and be prepared for potentially higher costs.
Sales Activity: Rising Momentum
Sales activity remains robust, with a 13% year-on-year increase in sales agreed. This surge is driven by renewed market confidence, more homes for sale, and a broader choice for buyers. Notably, the North East has seen a 22% rise in sales agreed, compared to just 1% in Wales.
What does this mean?
For Sellers: An increase in sales activity (up 13% year-on-year) suggests a healthy market with active buyers. Sellers can be optimistic about finding buyers more quickly than in a slower market.
For Buyers: Increased sales activity indicates competition among buyers, which might mean acting swiftly when a suitable property is found. However, the larger number of transactions also suggests a dynamic market with more options available.
Supply Dynamics: Increased Availability
The number of homes for sale is at its highest in eight years, up 20% from last year. In value terms, the housing market boasts £230 billion worth of homes for sale, marking a 25% increase. This growth is primarily fueled by a rise in the supply of 3 and 4-bedroom family homes, which had been scarce during the pandemic.
What does this mean?
For Sellers: With the highest number of homes for sale in eight years, sellers face more competition. It’s important to differentiate their property through competitive pricing, staging, and effective marketing.
For Buyers: More homes on the market provide buyers with greater choice and less pressure to make hasty decisions. This abundance can lead to better negotiation opportunities and finding a property that perfectly matches their needs.
Market Confidence and Pricing
With more homes entering the market, there is a shift in pricing strategies. Approximately 31% of the homes currently listed were also on the market in 2023 but didn’t sell due to high mortgage rates. Many of these properties have now reduced their asking prices by over 5% to attract buyers, highlighting the importance of realistic pricing.
What does this mean?
For Sellers: The trend of reducing asking prices to attract buyers underscores the importance of setting realistic prices from the outset. Overpricing can lead to longer times on the market and potential price reductions later.
For Buyers: Buyers benefit from the willingness of sellers to reduce prices, especially for properties that didn’t sell in the previous year. This situation offers potential bargains and greater negotiating power.
Election Influence
The upcoming general election on July 4, 2024, introduces an element of uncertainty. Historically, elections slow down market activity, but current projections suggest a minor impact this year. The ongoing need for housing, particularly among first-time buyers and those looking to upsize, will continue to drive sales, even if the pace of new sales agreements slows temporarily.
What does this mean?
For Sellers: The upcoming general election might slow new sales agreements temporarily, so sellers should be prepared for possible delays and consider this timing when planning to list their properties.
For Buyers: Buyers already in the process of purchasing are unlikely to be affected, but those at the start might face delays. It could be strategic to either complete purchases before the election or wait until the uncertainty passes.
Future Outlook
Looking ahead, the increased supply is expected to keep house prices in check throughout the year. While price inflation might remain flat, the steady flow of homes into the market ensures that buyers have ample choices, supporting overall market health.
What does this mean?
For Sellers: The expected flat house price inflation means sellers should not count on significant price increases in the near future. Focus on making properties attractive through improvements and competitive pricing to ensure sales.
For Buyers: Stable prices allow buyers to take their time to make well-considered decisions without the pressure of rapidly increasing prices. The abundant supply also means buyers can be selective and patient in their property search.
In Summary
The UK housing market in May 2024 is characterised by stability in prices, rising sales activity, and increased supply. These factors combine to create a balanced market that offers opportunities for both buyers and sellers. As we move towards the general election, it will be crucial to monitor how political developments influence market dynamics. For now, the market’s trajectory appears steady, with a focus on realistic pricing and sustained buyer interest.
