Let's take a look at October's property market kicking off with the headlines this month.
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Average new seller asking prices increased by 0.5% (+£1,950) this month to £368,231.
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The number of sales agreed is 17% below this time last year, as those sellers who are struggling to adjust their price expectations to match current activity levels are finding that their homes are being left on the shelf
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Buyers are still active for the right property at the right price, but agents advise that sellers need to capture attention with a competitive price from the first day of marketing, as starting too high and reducing later damages the chances of a sale
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The number of buyers enquiring about each available home for sale is 8% higher than the more normal market of 2019
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Importance of immediate buyer interest: if a property receives its first buyer enquiry on the first day of marketing rather than after two weeks, then Rightmove data shows that it is 60% more likely to find a buyer
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The proportion of homes that are finding a buyer has dropped from eight in every ten at the height of the frenzy, to a more subdued sales rate of six in every ten, making pricing competitively more critical to stand out
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Average fixed mortgage rates have now fallen for 11 consecutive weeks, with the average two-year fixed rate now below 6% for the first time since June, and the average five-year fixed rate dropping from 6.08% 11 weeks ago to the current 5.43
“New seller asking prices have seen a rise, as they usually do at this time of year following the summer holiday season. While this year’s much more subdued rise indicates that some new sellers are gradually heeding their agents’ advice to price competitively, agents report that other sellers still need to adjust their expectations on the price that they are likely to achieve in the current post-pandemic, lower-activity market, where six in ten homes are now selling rather than eight in ten. In a market that agents describe as the most price-sensitive ever, buyers are likely to be on the look-out for homes that they feel represent excellent value, and to attract one of these motivated buyers, sellers need to price right the first time. Tim Bannister Rightmove’s Director of Property Science
Economy
The Bank of England has once again held base rates at 5.25%, which will stay for at least another six weeks. Consumer confidence fell to -30 in October 2023 from -21 in September, the lowest reading in 3 months (GfK Consumer Confidence Tracker). Inflation rose by 6.7% in the 12 months to September 2023, the same rate as in August (ONS).
Prices
The average price for a property in August was £291,044, up 0.2% year-on-year, and 0.3% on the previous month (ONS). The average asking price of a newly marketed property increased by 0.5% this month to £368,231, below the historic norm in October of 1.4% (Rightmove). Halifax recorded an uptick in house prices in October, of 1.1%, an increase for the first time in 6 months. Nationwide also reported a rise of 0.9% last month.
Transactions
The HMRC reported that 85,610 sales took place in September, 0.6% down on the previous month, down on last year's levels (-17.0%). RICS' measure for Agreed Sales in the latest survey came in at a net balance of -25% in October, an improvement on -45% and -35% recorded in August and July respectively. Although there are fewer moves from mortgaged buyers, the number of cash buyers is holding steady. Over the last five years, cash buyers have accounted for 1 in 5 sales, this year they are making up 1 in 3 sales (Zoopla).
Demand
Mortgage approvals in September dropped to 43,300, 5% lower than the previous month. This is below the long-term average but a 9% improvement on the start of the year. Buyer demand is now a fifth lower than this time last year and 25% below the five-year average for October (Zoopla). The home buyer demand series in the latest RICS Residential Market Survey posted a net balance of -28% in October, less downcast of -37% seen the previous month and the least negative return since May.
The number of buyers enquiring to each available home for sale is still 8% higher than at the same time in pre-pandemic 2019. If a property for sale receives its first buyer enquiry on the first day of marketing rather than after two weeks, then Rightmove data shows that property is 60% more likely to find a buyer and be marked Sold Subject To Contract. Agents report that creating this immediate momentum is critical and that the most successful sellers are those who stand out as they are pricing most competitively against similar properties for sale. Accurately priced properties succeed in finding a buyer in less than half the time that it takes those that need a reduction, and when they do find a buyer the sale is also 50% less likely to fall through. This highlights the importance for serious sellers of working with a local estate agent to get the price right first time, rather than testing a higher price and mistakenly thinking that they can just reduce later without damaging their chances of a sale.
A more stable mortgage market is providing some home-movers with more confidence about what they are likely to be able to afford, even with rates remaining well above the ultra-low levels of recent years. The average two-year fixed rate is below 6% for the first time since June, and average two-year and five-year mortgage rates are both now lower than at this time last year during the post-mini-Budget period. In the last year, the average house price to earnings ratio has also decreased by close to 10%, meaning that buyer affordability, while still stretched, has improved compared to this time last year. Meanwhile, average fixed mortgage rates continue to trend downwards and have now fallen for 11 consecutive weeks, with the average five-year fixed rate dropping from 6.08% to the current 5.43% over that period. The cheapest available rates in some Loan-To-Value (LTV) brackets are now below 5%, with rates in other LTVs edging closer to sub-5%.
“Mortgage rates continue to trend in the right direction and have now dropped for 11 consecutive weeks, with buyer affordability gradually improving compared to this time a year ago. Those with a larger deposit have seen the biggest benefit from recent rate drops, with rates for those with a smaller deposit, typically those further down the housing ladder, not dropping as quickly. The mortgage market is much more stable right now compared to three months ago, giving movers a little more assurance over the rate they are likely to be offered and therefore what they are likely to be able to afford. Those looking to secure a new home for the new year should apply for a Mortgage in Principle to work out what they could afford, and listen to local estate agents about what’s happening in their local housing market.” Tim Bannister Rightmove’s Director of Property Science
Investment/lettings
At 5.7% in September, annual growth in rental prices in the UK is at its strongest since records began. The Index of Private Rented Housing Prices reports on both new lets and renewals. The average rent on newly agreed rental contracts rose to £1,283 in October, a 9.6% annual increase. This is the first time the annual growth rate has dipped below 10% since April (Homelet). Letting agents have an average of 25 email and phone enquiries for every property on their books, triple more than 2019 levels and five times more than May this year (Rightmove).
Development/new build
Just under 245,000 new homes were built in the year to the end of Q3 2023. This represents a 3% rise quarter on quarter, however, year-on-year completions fell 4.3% (MHCLG). Prime Minister Rishi Sunak has announced a U-turn on the government’s sustainability agenda. It seems that landlords will no longer have to have to achieve a minimum EPC grade to let out a property, as previously proposed. Britain's build-to-rent sector has doubled in value from £35bn in 2019 to £71bn in 2023 and is expected to reach £126bn by 2028 (Knight Frank).
We hope that was useful and informative. As always, our teams are here to help, get in touch with any questions about your local property market, and to discuss your home move considerations.
If securing a new mortgage or arranging a re-mortgage is important for you right now, click here to book an online consultation, our mortgage brokers are independent, and their services are free to you.
Finally, if you are (understandably) confused by some of the mixed market reporting, not least by some of the more sensational news reporting each month, click here for some independent insight into how House Price Indexes are compiled.
Sources: Rightmove, Zoopla, On the Market, Dataloft, Land Registry, National House Price Index, DLUHC
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