The latest data from Christopher Watkins and TwentyEA shows (see tables), listings are good and are turning into healthy transaction numbers. Although it’s busy, home moving services are hopefully not under quite as much pressure as they were in 2021.
What’s incredible about these numbers is that we are seeing the second best year to 2021, despite the fact that for most, property prices aren’t rising rapidly and rates haven’t actually fallen that much – now at 4.75% versus a high of 5.25%.
It shows that, although we will always see ‘booms and busts’ the property market is able to survive pretty shocking economic issues that in the past would have substantially reduced transactions and prices.
Supply and demand data from each of the indices:
Zoopla – Sales pipeline largest for 4 years & up 30% on last year
The sustained growth in new sales over the year has led to the largest sales pipeline for 4 years. We estimate that there are currently 306,000 homes with a sale agreed, which are working their way through the buying process towards completion. In number terms, this is 62,000 (or 26%) higher than a year ago.
The total sales value of homes in the pipeline is £113bn. This is 30% higher than this time last year, when a spike in mortgage rates hit buyer demand, reducing the number of sales agreed over 2023 H2.
The momentum in new sales looks set to continue into December. Many recent sales will turn into as sales completions in H1 2025.
First-time buyers – the largest buyer group in 2024
The growth in sales is being driven by a combination of first-time buyers (FTBs) and existing homeowners who delayed their moving decisions until borrowing costs fell and the outlook improved.
FTBs are on track to be the biggest buyer cohort in 2024, accounting for 36% of all sales. This is followed by existing homeowners buying with a mortgage (31%), comprising both upsizers and those relocating.
Cash buyers are on track to account for 27% of sales – a mix of homeowners who have paid off mortgages and some mortgage free investors. Landlords buying homes with buy-to-let mortgages are set to account for 7% of purchases, with their volumes hit by higher mortgage rates.
The rapid growth in rents and the decline in mortgage rates have shifted the renting vs buying dynamics and supported more FTB purchases. The average mortgage repayments for a typical UK first-time buyer home are 17% cheaper than renting, compared to a difference of just 2% a year ago, when mortgage rates were higher.
Rightmove
The latest snapshot of sales activity shows that the number of sales being agreed is now 29% ahead of the same period last year. Therefore, sales activity has not only bounced back from the low of last year but has continued on an upward trajectory. There is also a healthy level of underlying buyer demand as people continue to plan their next move. The number of people contacting agents about homes for sale is up by 17% compared with this time last year.
However, despite this strong housing market activity, the number of new properties coming to the market, and the time they are taking to sell are both increasing, resulting in an increase in available homes for sale. This reflects that some aspiring buyers are still priced out of the market. The number of available homes for sale is 12% higher than at this time last year, but also the average number of homes for sale per estate agent branch is at its highest since 2014.
Competition for buyers is particularly intense at the top-end of the market, where the number of four-bedroom detached houses and five-bedroom-plus homes available for sale is 17% ahead of last year. It’s a buyer’s market, reinforcing the need for sellers to price competitively while affordability is stretched and choice is high.
RICS Upbeat About The Market
The latest RICS Residential Survey shows national house price growth continuing to strengthen and buyer demand rising as the year ends and the institution says despite higher mortgage interest rates, the near-term outlook for market activity remains relatively positive.
The survey’s national house price indicator, in terms of net balance, posted a figure of +25% in November, up from +16% in October.
This marks the fourth consecutive monthly increase, further cementing the upward trajectory of house price growth observed since the summer. Surveyors also expect house prices to continue rising over the next three and 12 months, reflecting a robust outlook for the year ahead.
New buyer enquiries maintained positive momentum, recording a net balance of +12%; this is largely unchanged from the previous month and highlighting a modest but sustained recovery in buyer demand.
However, agreed sales volumes remained broadly flat, with a net balance of +1% compared to +8% last time round.
Looking ahead, a net balance of 19% of respondents anticipate an increase in sales activity over the next three months, although this figure is more moderate than last month’s reading.
RICS says that supply-side trends were also positive, with new instructions rising for the fifth consecutive month, as evidenced by a net balance of +17%. Nevertheless, market appraisals in November were on a par with levels seen a year ago, which could signal a potential slowdown in the pipeline of new listings as we move into 2025.
Looking across to the lettings market, tenant demand declined slightly in November, with a net balance of –1%, marking the first decline since 2020.
This reduction may reflect seasonal factors.
Meanwhile, landlord instructions continued to fall, with a net balance of –13%, contributing to the ongoing imbalance between supply and demand in the rental sector.
Despite the slower demand backdrop, rental prices are forecast to edge higher, with a net balance of +29% of respondents expecting increases in the near term.
RICS senior economist Tarrant Parsons says “although the latest survey results continue to signal a steady improvement in buyer demand across the residential market, the broader macro environment is likely to pose additional headwinds moving forward. Most significantly, the recent rise in mortgage interest rates may curtail the recovery in market activity before long, and this is reflected in the slightly less optimistic sales expectations data coming through this month. Moreover, measures of consumer and business confidence across the economy have deteriorated of late and, if sustained, this could begin to feed through into housing market conditions in the months ahead."
