During June, the UK property market has continued on a path of cautious optimism. While the rapid growth of previous years has slowed, a sense of stability is emerging, driven by rising buyer demand and potential shifts in interest rates.
Key Trends Shaping the Market This Month
Market Recovery Gathers Momentum
The property market is experiencing a steady recovery, which is good news for both buyers and sellers. After a period of uncertainty, house prices are beginning to grow again. According to Nationwide Building Society, May 2024 saw a 0.4% increase in average house prices, bringing the annual growth rate to 1.3%. This suggests that the market has regained its footing and is on an upward trajectory.
Regional Variations Persist
While the national picture shows growth, it’s important to recognize the regional variations within the UK property market. Scotland leads with a significant 6.7% annual increase in house prices, while England and Wales have seen more modest rises of 1% and 1.3%, respectively. Northern Ireland has also shown steady growth of around 4%. Understanding these regional differences is crucial for making informed decisions.
The Interest Rate Question
Speculation around interest rates remains a significant factor influencing the market. With inflation falling closer to the Bank of England’s 2% target, a potential base rate cut could be on the horizon. This could be a game-changer, making mortgages more affordable and potentially boosting buyer demand.
Economists predict the first cut could come as early as August 2024. While the impact on house prices remains uncertain, it is likely to contribute to a more vibrant market.
Election Jitters or Business as Usual?
With the upcoming general election in July, some worry about potential market disruptions. However, experts suggest that this is unlikely. Unlike past elections with significant policy shifts, the current political landscape does not propose drastic changes impacting the housing market.
The anticipated interest rate cut is expected to have a more significant impact on market activity this year.
Supply and Demand: Finding Balance
There are signs of a healthy increase in the number of properties coming onto the market, which is good news for buyers. This increased supply is expected to keep house price inflation in check throughout the year. While significant price hikes might not be imminent, the steady flow of properties ensures buyers have more options in a balanced market.
What Does This Mean for You?
Landlords
The rental market continues to see high demand, with rents rising at a slower pace than last year. Zoopla reports an average increase of 6.6% for new lets in April 2024. This presents an opportunity for stable returns, but tenant retention is key. Good communication, responsive maintenance, and competitive rent and amenities will be crucial for attracting and keeping quality tenants.
Buyers
With a potential interest rate cut on the horizon, affordability might improve in the coming months. However, increased competition due to rising demand means it’s still a seller’s market in many areas.
Sellers
While significant price rises are less likely, the market conditions remain favourable for sellers. At Pearson Keehan, we suggest focusing on presenting your property in its best light through minor improvements, home-staging, and competitive pricing to attract buyers quickly in a market with more options.
The Bottom Line
The UK property market is moving towards cautious optimism. House prices are showing signs of growth, with regional variations offering opportunities for both buyers and sellers. The potential for a base rate cut later this year could be a major driver of market activity. With more properties coming onto the market, a sense of balance is emerging.
