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In the recent STREET quarterly property market report, the property market has shown promising signs with a surge in new listings. This surpasses the levels of the past three years.
This increase in listings looks set to drive the market trend towards an increase in sales across residential and commercial real estate. At Porterstore, we see this as being fuelled by a wave of reasonably priced properties entering the market. This comes after several years of escalating house prices and other price rises which have contributed to the Cost of Living Crisis.
Alongside this, it’s also important to bear in mind that there has been a noticeable uptick in price reductions too…
In comparison to Q1 2023, price reductions have risen by 6%. Price reductions have also risen by a staggering 115% from 2022. This surge in price reductions could be put down to uncertainties in the lending market and the UK economy. It could also be a reflection of how the interest rate affects sellers to adjust prices to align with buyer affordability.
It may also come from over-optimism among sellers influenced by the bullish markets of 2021-2022 when the rate of inflation wasn’t causing as much concern as in the last 2 years and when the Bank of England base rate was more favourable.
While fall-through rates have remained stable, there has been a notable 7% increase in withdrawals from Q1 2023. This increase indicates that sellers are hesitant to meet buyer price expectations, adapt to current market dynamics and sell under less favourable conditions.
On the sales front, the year started off well in the months to February with 13% rate rises in sales agreed compared to the same period last year. This surge represents a greater buyer demand in the market with more people borrowing money. This, in turn, presents excellent conditions for sellers.
Despite a longer average time on the market, there has been a gradual rise in the proportion of listings with a sale agreed within the first month of listing. This trend suggests that newer properties entering the housing market are being more realistically priced by estate agents than in the previous 2 years. This is clearly in an attempt to meet buyer expectations and adapt to market conditions.
First time buyers with a good credit score, who may have deposits ready to use in their savings account (or cash ISA with better savings rates) are keen to enter the property market. Even with mortgage rates and subsequent mortgage payments still being relatively high compared to recent years, the European Central Bank looks set to bring down rates soon.
There appears to be some short term optimism from the Governor of the Bank of England too…
Governor Andrew Bailey said that there is “strong evidence” to suggest that the process to bring inflation down is working. This is despite the fact that the current bank rate remains at a 15 year high of 5.25%. This was determined by the fixed rates set by the monetary policy committee (MPC).
Regional analysis reveals interesting variations in market activity, with the East and South East of England standing out for experiencing the highest percentage of sales relative to available properties. This highlights the localised nature of market dynamics. It also reflects the varying degrees of buyer demand and the types of borrowing across different regions.
People from different regions and different backgrounds are accessing credit card borrowing, tax free ISA savings and mortgages or loans with a standard variable rate. With this, it is apparent that there are signs of optimism for spending on goods and services too. The Consumer Prices Index (CPI) rose by 3.4% as a measure of inflation in the 12 months to February 2024. Whilst still an increase, this was down from 4.0% in January and well below the peak of 11.1% in October 2022.
As we look ahead to Q2 2024, the property market looks set for continued high activity. An increase in sales and new listings is anticipated, meaning Porterstore’s services will be in demand.
The outlook remains positive as more reasonably priced properties enter the market, attracting buyers and driving transaction volumes. Sellers seem to be adapting to market realities by adjusting prices to meet buyer affordability. This paves the way for a dynamic and active market landscape in the coming months.
As ever, Porterstore will be ready and waiting to help people buying and selling property, with our flexible and convenient storage services.
We know from experience that buying and selling property is rarely plain sailing. There can be bumps in the road which mean sellers or buyers have a need to use storage.
We aim to meet those needs flexibly and conveniently and help to remove some of the stresses from the process.
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