Property market remains strong despite economic backdrop

Despite economic uncertainty, the property market remains resilient, according to industry professionals.

The Guild of Property Professionals says despite the economic backdrop mortgage approvals have been on the rise.

According to Bank of England data, mortgage approvals, a leading indicator of demand, are 18.5% higher than in January. The 8% uptick between September and October reflects growing confidence in the market.

Closing months bring positive signs

Iain McKenzie, CEO of The Guild of Property Professionals, said: “While 2023 has been a slow recovery from the political shocks of 2022, the closing months bring positive signs. Inflation has more than halved since the start of the year, and interest rates have been held for the fourth consecutive time.

“Consensus forecasts by HM Treasury suggest that interest rates are at their peak and will fall to 4.7% by the end of 2024, which should improve affordability and increase demand.”

He added: “Encouraging news about inflation and the growing confidence in the market is reflected in more competitive mortgage rates.

“While significant rate cuts are unlikely until inflation falls more sharply, rates are edging down, with lenders in strong competition loosening criteria to encourage borrowing.”

Ups and downs in property market

The pace of house price moderation also appears to be steadying, with RICS revealing that a net balance of 63% of property professionals reported house prices falls in October, down from 67% in September.

Average house prices remain resilient, showing a 1.8% increase from the beginning of the year. Monthly price falls have slowed, moderating to -0.5% in September from -1.2% in January, indicating a rebalancing market.

Mr McKenzie says despite ups and downs, both the Nationwide and Halifax indexes displayed a return to moderate monthly house price growth in October.

He said: “The adjustment to higher mortgage rates is expected to continue in 2024, with gentle price moderation. However, growth of 5.8% is forecast between 2025 and 2027 according to HM Treasury and an average of Independent Forecasts.”

Landscape is evolving

According to Rightmove, stock levels are returning to normal after pandemic shortages. While the supply of lower-priced properties has reduced, all other price brackets have risen.

Sellers looking to move may benefit from slightly reduced prices on their next property.

Mr McKenzie added: “The landscape is evolving, presenting opportunities for both buyers and sellers. With interest rates expected to start easing back in 2024, combined with pent-up demand and the usual seasonal uplift, activity is expected to improve in spring.”

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