MHHG estate agents

Market Overview
In June, the UK property market has demonstrated resilience, maintaining a positive momentum that began earlier this year. Despite the slight deceleration in the pace of sales compared to the previous few months, new sales agreed in June were still 8% higher than in the same period last year. Key indicators of market activity also show year-on-year improvements.

Seasonal Slowdown and Post-Election Impact
As the summer season approaches, a natural slowdown in market activity is observed. Additionally, the general election had a temporary impact, with some buyers and sellers delaying their decisions until post-election. Consequently, sales agreed saw a minor month-on-month decline across all regions, most notably in the North East (-6%) and West Midlands (-5%).

Stock and Price Trends
The overall stock of homes for sale has grown in all areas, albeit at a reduced rate compared to previous months. The number of homes available for sale remains nearly 20% higher than a year ago. House prices have shown a firming trend due to improved sales volumes in the first half of 2024, with all regions recording month-on-month increases since January.

The annual UK house price inflation rate stabilized at 0% in May 2024, recovering from a low of -1.3% in November 2023. House prices continue to fall annually in southern England but at a decreasing rate, while prices in other regions, such as Northern Ireland, are rising by up to 3.3%.

Sales Projections and Market Resilience
The market is on track for approximately 1.1 million sales completions in 2024, with 75% of these either completed or in progress. This figure represents a 10% increase from 2023, although it remains below the 20-year average. Despite higher borrowing costs, this increase indicates a balanced outlook between seller realism and cautious buyer confidence.

Affordability and Mortgage Rates
House prices remain relatively high in terms of affordability, with the recent spike in mortgage rates leading to an overvaluation peak of 13% at the end of 2023. However, faster wage growth and longer-term mortgages have helped mitigate some of this impact. By the end of Q1 2024, house prices were estimated to be 8% overvalued, with expectations that this overvaluation will dissipate by year-end if prices rise by 1.5% and mortgage rates stabilize around 4.5%.

Outlook for 2024 and Beyond
The near-term outlook for the sales market hinges on the trajectory of mortgage rates, which are influenced by interest rate trends. Any reductions in the base rate during the summer and autumn could boost market sentiment and activity. Projections suggest that mortgage rates will stay in the 4-4.5% range into 2025, supporting sales volumes and modest house price inflation. Southern England's house prices are expected to underperform compared to the UK average, as they continue to align more closely with income levels.

Conclusion
Overall, the UK property market has shown remarkable resilience in the face of higher mortgage rates and economic uncertainties. With a projected increase in sales and stable house price inflation, the market is poised to navigate the challenges of 2024 effectively.