MHHG estate agents

The property market in the final quarter of 2023 exhibited robust performance, with above-average new sales and a supportive trend in prices. Various factors, including rising incomes, declining mortgage rates, increased supply, and improved buyer-seller alignment on pricing, contributed to a positive market sentiment. The UK house price index reported a slower pace of annual decline, signaling a moderation in price falls across all regions. However, divergences in house price indices at market turning points highlight the dynamic nature of the real estate market.

Market Performance:

Sales Surge: The final weeks of Q4 2023 witnessed a 17% increase in new sales compared to the previous year, surpassing 2019 levels.

Supply Boost: Available supply increased by a quarter, providing buyers with more choices and supporting overall sales.

Price Trends: The UK house price index recorded a slower annual decline of -1.1% in November 2023, down from +7.2% a year ago, indicating a stabilization in values.

House Price Indices:

Cash vs. Mortgage Purchases: Cash purchases, expected to represent a third of all sales in 2023, come at a 10% lower average price than mortgage-funded sales, making them more affordable and requiring more modest price reductions.

Mortgage Market Dynamics:

Mortgaged Sales Decline: Mortgaged sales are projected to be 30% lower in 2023 due to higher mortgage rates impacting demand.

Regulatory Impact: Mortgage affordability testing regulations since 2015 have capped buying power, requiring higher incomes and larger deposits. Despite lower mortgage rates, house prices are expected to remain stable in 2024.

Buyer Profiles and Trends:

First-Time Buyers: Despite affordability challenges, first-time buyers constitute 40% of potential homebuyers in the next two years, motivated by rapid rent growth.

Upsizers: Accounting for a third of potential buyers, upsizers await economic clarity in 2024. Their decisions hinge on mortgage rate trajectories and getting better value for larger homes.

Geographical Shifts: Nearly a quarter of home movers express interest in relocating, with a significant trend of buyers looking further afield for better value, especially in high-value housing markets.

Future Outlook:

First-Time Buyers Dominance: First-time buyers are expected to remain the largest buyer group in 2024 despite affordability challenges.

Geographical Diversity: The trend of buyers looking beyond local areas for better value is anticipated to continue, affecting strategies for home builders and estate agents.

In summary, the property market in Q4 2023 displayed resilience, driven by multiple factors. While challenges such as mortgage rate fluctuations and affordability persist, the market's ability to adapt and the shifting preferences of buyers provide opportunities for strategic positioning in the coming year.