Property market update – February 2024
As 2024 starts to shape up, and the worst of winter nights seems to be heading in our rear-view mirror, we take a reflective look at 2023 and see how we envisage the first half of 2024.
All areas ranging from actual Countries in the Uk to the smaller counties to towns and even down to local villages only a few miles from one another, have unique property trends, however, 2023 probably witnessed, a first for a while, collaboration of factors that ensured all areas in the UK were very similar throughout the year.
Prompted primarily by the first for a decade, continued rise in mortgage interest rates, and off the back of the 2021 post covid surge in property prices triggered by the government’s decision to have a short, sharp stamp duty pause, we witnessed in late 2022 and continued and perhaps even escalated in 2023, the first real decline in house prices since the devesting financial crash of 2008. In real terms the unrealistic jump in prices due to the sudden huge demand and short supply was always going to mean a future slowing down period. Interest rates increasing however and the uncertainly of their eventual level, the cost-of-living crisis, inflation rising and general low optimism around the UK and the World in general, meant one thing above all else was going to direct the housing market, sentiment and uncertainly.
So, house prices in our local area saw in some cases and depending upon your price bracket at least a 10% reduction in real terms, property achieving for example £900k in august 2020 were now at £800k and struggling, £600k was now £525k the higher the property the higher the drop, first time buyers disappeared and new homes were offering big incentives suddenly not a problem of course if you weren’t planning to move this year, so supply came down, no new stock, no new enquires, buyers got cold feet, sellers decided to wait. Unfortunately for those in the throws already, or having to move, all these factors combined to have a massive effect.
In our local markets, Bitterne, Hedge End, Bishops Waltham & Fair Oak we cover property values from £200k to £4,000,000 and everyone was affected.
Many sales fell through towards the end of the transaction, which is very unusual, with people getting spooked on value or security, or cost as they adjusted to ever increasing quotes for higher monthly mortgage payments, “ do we really need to move ?” became a valid and frequent question. Normally if a sale falls through, and it happens unfortunately, a stiff gin or red wine and you start over again, this year however prices had adjusted downwards from where they were, leaving people with less equity, less purchase ability and less buyers and stock to choose from. Not a pretty picture for anyone.
However, as we moved into late 2023 and now 2024, we witnessed some green shoots and signs that normality and optimism was returning, and this is still the case as of right now. New stock continues to come to market, given both buyers and sellers choice, values have now evened, sellers and buyers are both more realistic and prepared to make a deal, and a more normal supply and demand equilibrium has returned. Sales being put in place now have a far higher chance of actually completing as confidence returns.
Our prediction for our area at least, the most important one in our view, is that if we move into the spring and summer months without any further upheaval globally or in the Uk, we should really see a market where sensible sellers, marketing their property at the current realistic value will attract strong interest and buyers, there should be plenty of stock so they should also be able to find a new home, also priced sensibly. We will update again in May as we start to halfway into a positive 2024.
Steve White, Partner.
