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House Price Index Update: September 2024

Posted by admin on October 25, 2024
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As we delve into the housing market landscape for September 2024, key indicators suggest a shift toward recovery. With mortgage rates hitting their lowest in 15 months and a notable uptick in sales activity, the latest House Price Index sheds light on these evolving trends.

Key Insights

  1. Lower Mortgage Rates: The average mortgage rate for a new 5-year, 75% loan-to-value mortgage has dropped to 4.3%, down from 5.5% a year ago. This decline is energizing buyer interest and activity in the market.
  2. Rising Buyer Demand: Year-on-year, buyer demand has surged by 26%, with sales agreements climbing 25%. This revitalization indicates a robust rebound from recent slowdowns.
  3. Price Sensitivity: Despite increasing demand, buyers remain cautious. The average UK house price has risen by just 0.7% to £267,100, reflecting a careful approach to pricing amidst heightened competition.
  4. Affordability Constraints: High property values, especially in regions like southern England, continue to challenge affordability. However, more affordable areas are witnessing price increases of around 2.5%, indicating regional disparities.

Current Market Dynamics

The housing market is seeing an increase in available properties, with listings up 12% from last year. Notably, nearly one-third of homes on the market are ‘chain-free,’ as investors and second homeowners respond to potential tax changes.

Coastal and rural regions are experiencing a significant rise in housing supply—up to 40%—partly driven by speculations around tax implications for second homes. This influx of listings is shaping a more balanced market as landlords adjust to evolving financial pressures.

Average House Prices Breakdown

Property TypeAverage Price (August 2024)Year-on-Year Change (£)Year-on-Year Change (%)
All Property£267,100+£1,970+0.7%
Detached Houses£451,600+£1,190+0.3%
Semi-Detached Houses£273,200+£1,840+1%
Terraced Houses£235,800+£3,310+1.4%
Flats£191,500+£200%

Looking Ahead

The outlook for the housing market appears cautiously optimistic. Analysts predict continued, albeit modest, price growth as sales volumes rise. Buyers are increasingly willing to negotiate, with nearly 37% of transactions closing at over 5% below the initial asking price, indicating ongoing price sensitivity.

Mortgage rates are expected to stabilize in the high 3% to low 4% range through 2025, potentially enhancing affordability for buyers. Coupled with rising household incomes, these factors are likely to support increased sales activity and gradual price recovery.

Conclusion

The September 2024 House Price Index reflects a market adapting positively to lower borrowing costs and rising buyer interest. While challenges such as affordability persist, the overall trend points to a resilient housing market poised for steady recovery. Sellers should be mindful of pricing strategies to attract buyers effectively in this evolving environment.

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