Share: Share on Facebook Share on Twitter Share on LinkedIn I recommend visiting cushmanwakefield.com to read:%0A%0A {0} %0A%0A {1}
Residential-Market-Commentary Residential-Market-Commentary

Residential Market Commentary

Millie Harper • 21/05/2024

MAY UK HOUSING MARKET OVERVIEW

The MPC has now voted to keep rates stable at 5.25% at six consecutive meetings, with the voting 7 (on holding) to 2 (on reduction), highlighting a softening of stance from the MPC, and an increased likelihood in rate cuts in the short term – the next meeting is on 20th of June.

Most recent inflationary data for March saw CPI annual growth continue to fall – from 3.4% in February to 3.2% in March. Nevertheless, inflation in the UK is still running higher than other advanced economies, with Eurozone inflation now at 2.4%.

The UK economy grew by 0.4% in March 2024, following continued growth in both January and February. Overall, this led to a growth in the first quarter of 2024 of 0.6%. The outlook for growth remains muted, with HM Treasury consensus of independent forecasters suggesting growth of 0.4% for 2024 – albeit with an improved outlook for inflation at 2.1% by the end of the year.

In truth, the inflationary pressures, energy pricing shocks, and tightening of monetary policy are still having an impact and will weigh on the economy certainly during the first half of 2024. There is likely to be continued pressure on businesses and subsequently employment, and the impact of increased mortgage rates may take a while to filter through.

Some early signs of optimism in the housing market have continued, with an uptick in mortgage approvals and completed sales. However, monthly house price growth did see modest falls in March and April, and mortgage rate reductions have stalled. This is a reminder that the market isn’t fully on the road to recovery, as affordability pressures remain.

The residential market is extremely sensitive to interest rate rises and over the last couple of years mortgage rates have increased. As we enter 2024, and interest rates are thought to have peaked, mortgage rates had started to decline in anticipation of base rate cuts. For example, if you take a 2-year fixed mortgage with a 90% LTV, average mortgage rates peaked in August 2023 at 6.6%, falling to 5.25% in February 2024. However, in March and April 2024 mortgage rates experienced a small uptick, following some uncertainty rate cuts and a surge in buyer demand. However, mortgage rates are still expected to fall over the year, once rate cuts commence (Bank of England).

Mortgage approvals are a leading indicator for housing market demand. 60,383 mortgages were approved in February 2024, 7.7% above last month and 39.8% above the same time last year, showing a continued increase in housing market demand. However, mortgage approvals remain 7.3% below the pre-pandemic average (February 2017-2019 average) (Bank of England).

An estimated 84,200 sales completed in March 2024, 1.4% above last month, the third consecutive monthly increase. Sales however still remain 6.5% below the same time last year and 14.2% below pre-pandemic levels (March 2017-2019 average) (HMRC).

Nationwide reported a 0.4% seasonally adjusted monthly decrease in house prices in April 2024. Two consecutive monthly falls in house price growth have led to annual house price growth slowing to 0.6%, down from 1.6% last month.

APRIL UK HOUSING MARKET OVERVIEW

The MPC has now voted to keep rates stable at 5.25% for five consecutive meetings, with the voting 8 (on holding) to 1 (on reduction), highlighting a softening stance from the MPC, and an increased likelihood of rate cuts in the short term – the next meeting is on 9th of May.

The most recent inflationary data for February saw CPI growth fall sharply, from 4% to 3.4%. Nevertheless, inflation in the UK is still running higher than other advanced economies. Eurozone inflation is now at 2.6%, with flash estimates putting that even lower at 2.4%.

The UK economy grew by 0.2% in January 2024, following a fall of 0.1% in the final month of 2023. Nevertheless, in the three months to January, this still put GDP in negative territory of 0.1%. In all, GDP is estimated to have increased by 0.1% for the year. The outlook for growth remains muted, with HM Treasury consensus of independent forecasters suggesting growth of 0.4% for 2024, albeit with an improved outlook for inflation at 2.1% by the end of the year.

In truth, the inflationary pressures, energy pricing shocks, and tightening of monetary policy are still having an impact and will certainly weigh on the economy during the first half of 2024. There is likely to be continued pressure on businesses and subsequently employment, and the impact of increased mortgage rates may take a while to filter through, with only half of the interest rate rises estimated to have filtered through to the market.

As for the housing market, early signs of optimism continued, with mortgage rates slowly reducing and an uptick in mortgage approvals and completed sales. Monthly house price growth did see a modest fall in March, a reminder that the market isn’t fully on the road to recovery, as affordability pressures remain.

MORTGAGE INTEREST RATES

The residential market is extremely sensitive to interest rate rises and over the last couple of years, mortgage rates have increased. As we enter 2024, and interest rates are thought to have peaked, mortgage rates have started to decline in anticipation of base rate cuts. For example, if you take a 2-year fixed mortgage with a 90% LTV, average mortgage rates peaked in August 2023 at 6.6%. As of February 2024, they were down to an average of 5.3% (Bank of England External Link).

 

MORTGAGE APPROVALS

Mortgage approvals are a leading indicator for housing market demand. 60,383 mortgages were approved in February 2024, 7.7% above last month and 39.8% above the same time last year, showing a continued increase in housing market demand. However, mortgage approvals remain 7.3% below the pre-pandemic average (February 2017-2019 average) (Bank of England External Link).

 

SALES

An estimated 82,940 sales completed in February 2024, 1.2% above last month, the second consecutive monthly increase. Sales however, still remain 5.6% below the same time last year, and 15.5% below pre-pandemic levels (February 2017-2019 average) (HMRC External Link).

 

HOUSE PRICES

Nationwide External Link reported a 0.2% seasonally adjusted monthly decrease in house prices in March 2024. Despite negative monthly growth, annual house price growth still increased to 1.6%, up from 1.2% last month.

MARCH UK HOUSING MARKET OVERVIEW

“We are not out of the woods yet” is the general message on inflation after CPI stayed at 4.0% y-o-y in January 2024 – the same as levels seen in December 2023.

The MPC has now voted to keep rates stable at 5.25% at four consecutive meetings, with market expectations now solidified that this marks the peak with the comment that current rates would be kept “under review” and that “more evidence was needed”. The next MPC meeting is on Thursday 21st March.

The UK economy shrank by 0.3% in the final quarter of 2023, with the economy entering a technical recession after two quarters of contraction. In all, GDP is estimated to have increased by 0.1% for the year. The outlook for growth is muted, with the HM Treasury comparison of independent forecasters suggesting growth of 0.4% for 2024.

In truth, the inflationary pressures, energy pricing shocks and tightening of monetary policy are still having an impact and will weigh on the economy, certainly during the first half of 2024. There is likely to be continued pressure on businesses and subsequently employment, and the impact of increased mortgage rates may take a while to filter through, with only half of interest rate rises estimated to have filtered through to the market.

As for the housing market, there are early signs of optimism, with mortgage rates reducing, an uptick in mortgage approvals and completed sales, and annual house price growth moving into positive territory for the first time in over a year.

MORTGAGE INTEREST RATES

The residential market is extremely sensitive to interest rate rises and over the last two years mortgage rates have increased. As we enter 2024, and interest rates are thought to have peaked, mortgage rates have started to decline in anticipation of base rate cuts. For example, if you take a 2-year fixed mortgage with a 90% LTV, average mortgage rates peaked in August 2023 at 6.6% and are now down to 5.5% as of January 2024 (Bank of England External Link).

 

MORTGAGE APPROVALS

Mortgage approvals are a leading indicator for housing market demand. 55,227 mortgages were approved in January 2024, 7.2% above last month and 40.2% above the same time last year, showing a continued increase in housing market demand. However, mortgage approvals remain 16.6% below the pre-pandemic average (January 2017-2019 average) (Bank of England External Link).

 

SALES

An estimated 82,000 sales completed in January 2024, 1.9% above last month, the first monthly increase since August 2023. Sales however still remain 11.9% below the same time last year, and 15.9% below pre-pandemic levels (January 2017-2019 average) (HMRC External Link).

 

HOUSE PRICES

Nationwide External Link reported 0.7% seasonally adjusted monthly increase in house prices in February 2024. This resulted in annual house price growth increasing to 1.2%, the first time in positive territory since January 2023. Halifax External Link reported annual house price growth at -4.6% in August 2023.

FEBRUARY UK HOUSING MARKET OVERVIEW

“We are not out of the woods yet” is the general message on inflation after CPI rose to 4.0% y-o-y in December 2023, after registering 3.9% in the November 2023 release. The MPC has now voted to keep rates stable at 5.25% in four consecutive meetings, with market expectations now solidified that this marks the peak with the comment that current rates would be kept “under review” and that “more evidence was needed”. The next MPC meeting is on Thursday 21st March. High interest rates, strong inflation, and a weaker economy have impacted buyers’ confidence, leading to a slowdown in housing market activity. However, there are early signs of optimism with mortgage rates reducing, an uptick in mortgage approvals, and modest increases in house prices.

MORTGAGE INTEREST RATES

The residential market is extremely sensitive to interest rate rises and over the last two years mortgage rates have increased. As we enter 2024, and interest rates are thought to have peaked, mortgage rates have started to decline in anticipation of base rate cuts. For example, if you take a 2-year fixed mortgage with a 90% LTV, average mortgage rates in December 2023 were 5.7%, down from a peak of 6.6% in August 2023. (Bank of England).

 

MORTGAGE APPROVALS

Mortgage approvals are a leading indicator for housing market demand. 50,459 mortgages were approved in December 2023, 2.3% above last month and 25.6% above the same time last year, showing a continued increase in housing market demand. However, mortgage approvals remain 21.6% below the pre-pandemic average (December 2017-2019 average). (Bank of England).

 

SALES

Completed transactions remain down on previous benchmarks, however, the level of decline is slowing. An estimated 80,420 sales completed in December 2023, 0.8% below last month, 17.8% below the same time last year, and 18.4% below pre-pandemic levels (December 2017-2019 average). (HMRC).

 

HOUSE PRICES

Nationwide reported annual house price growth at -5.3% in September 2023, unchanged from the previous month. Halifax reported 0.7% seasonally adjusted monthly increase in house prices in January 2024. This resulted in annual house price growth increasing to -0.2%, the strongest level since January 2023.

JANUARY UK HOUSING MARKET OVERVIEW

Following a series of successive interest rate hikes, the UK economy is currently in a ‘wait and see’ period, to assess the effects on the substantial inflationary pressures that have impacted the economy over the last two years. 

There is positive news on inflation, with data released just before Christmas seeing CPI increasing to 3.9% in the 12 months to November, down from 4.6% in the previous month, as a result of falling energy prices as well as markedly lower core and food inflation.

The MPC has consecutively voted to keep rates stable at 5.25% and market expectations are that this marks the peak of interest rate hikes, much lower than previous market expectations of around 6%. The next MPC meeting is on February 1st.

High interest rates, strong inflation, and a weaker economy have impacted buyers’ confidence, leading to slowdown in housing market activity. However, over the last couple of months mortgage rates have improved, there has been a slight pickup in mortgage approvals, and modest increases in house prices.

MORTGAGE INTEREST RATES

The residential market is extremely sensitive to interest rate rises and over the last two years mortgage rates have increased. As we enter 2024, and interest rates are thought to have peaked, mortgage rates have started to decline in anticipation of base rate cuts. For example, if you take a 2-year fixed mortgage with a 90% LTV, average mortgage rates in December 2023 were 5.7%, down from a peak of 6.6% in August 2023. (Bank of England).

 

MORTGAGE APPROVALS

Mortgage approvals are a leading indicator for housing market demand. 50,067 mortgages were approved in November 2023, 4.6% above last month and 9.9% above the same time last year, showing a pickup in housing market demand. However, mortgage approvals remain 23.6% below the pre-pandemic average (November 2017-2019 average).  (Bank of England).

 

SALES

Sales data lags mortgage approvals with the conveyancing process taking several months and therefore the number of completed sales remain down. An estimated 80,780 sales completed in November 2023, 1.2% below last month, 21.1% below the same time last year, and 18.8% below pre-pandemic levels (November 2017-2019 average) (HMRC).

 

HOUSE PRICES

Nationwide reported no seasonally adjusted monthly increase in house prices in December 2023, following three successive monthly increases. Annual house price growth is now at -1.8%, a slight improvement on last month (-2.0%). 

DECEMBER UK HOUSING MARKET OVERVIEW

Following a series of successive interest rate hikes, the UK economy is currently in a ‘wait and see’ period, to assess the effects on the substantial inflationary pressures that have impacted the economy over the last two years.

There are signs that inflation has peaked but falls haven’t been as stark as in other advanced economies. CPI rose by 4.6% in October 2023.

The MPC has consecutively voted to keep rates stable at 5.25%, which, if this were to mark the peak – as market pricing now seems to suggest - would be much lower than previous market expectations of around 6%.The next MPC meeting is on December 14th.

The pause in interest rate hikes was driven partially by slower inflation, but also by a result of weakening economic data. Notably, the OBR economic projections released at the Autumn Statement were a downgrade on previous forecasts.

Housing market activity has continued to slow, as high interest rates and inflation, and a weaker economy impact buyers’ confidence. However, over the last couple of months we have seen mortgage rates improve, a slight pickup in mortgage approvals, and monthly increases in house prices.

MORTGAGE INTEREST RATES

The residential market is sensitive to interest rate rises and throughout 2023 mortgage rates have fluctuated. For example,e on a 2-year fixed 90% LTV mortgage, the mortgage rate was 5.66% in January 2023. Rates started to slow, dropping to 5.07% in April, but as banks realised inflation was sticker than expected, and further rate rises were needed, mortgage rates started to increase again, peaking at 6.59% in August. With interest rates being held at 5.25% in September and November (below market expectations of a peak at 6%), rates have started to fall again, averaging 6.06% in October 2023. (Bank of England).

 

MORTGAGE APPROVALS

Mortgage approvals are a leading indicator for housing market demand. 47,383 mortgages were approved in October 2023, 8.5% above last month, showing an uptick in housing market demand. However, they remain 17.1% below the same time last year and 28.5% below the pre-pandemic average (October 2017-2019 average). (Bank of England).

 

SALES

Sales data lags mortgage approvals with the conveyancing process taking several months. An estimated 82,910 sales completed in October 2023, 2.5% below last month, 20.5% below the same time last year, and 16.7% below pre-pandemic levels (October 2017-2019 average) (HMRC).

 

HOUSE PRICES

Nationwide reported a 0.2% seasonally adjusted monthly increase in house prices in November 2023, following 0.9% monthly growth in October. These monthly increases have resulted in an improvement in annual house price growth, now at -2.0%.

NOVEMBER UK HOUSING MARKET OVERVIEW

Following a series of successive interest rate hikes, the UK economy is currently in a ‘wait and see’ period, to assess the effects on the substantial inflationary pressures that have impacted the economy over the last two years.

There are signs that inflation has peaked but falls haven’t been as stark as in other advanced economies. CPI rose by 6.7% in September, the same rate as August.

The MPC has consecutively voted to keep rates stable at 5.25%, which, if this were to mark the peak – as market pricing now seems to suggest - would be much lower than previous market expectations of around 6%.

The pause in interest rate hikes has been driven by weakening economic data. Since then, data has been released which has fallen on the downside of the MPC projections - CPI, services inflation, monthly GDP and increased unemployment - these are likely to mean the MPC keeps the rates at 5.25%. However, average weekly wages increasing to 8% could potentially raise concern.

Housing market activity has continued to slow, as high interest rates, sticky inflation, and a weaker economy impact buyers’ confidence. However, mortgage rates have improved, and house prices picked up over the last month.

MORTGAGE INTEREST RATES

Mortgage interest rates have been particularly affected by the economic climate. Rates on a 2-year fixed 90% LTV mortgage reached 6.59% in August 2023. With the MPC decision to keep interest rates at 5.25% for now, mortgage rates on a 2-year fixed 90% LTV declined in September 2023 to 6.38%. (Bank of England).

 

MORTGAGE APPROVALS

43,328 mortgages were approved in September 2023, 4.7% below last month, 32.5% below the same time last year and 34.5% below the pre-pandemic average (September 2017-2019 average). (Bank of England).

 

SALES

An estimated 85,610 sales completed in September 2023. Monthly sales rates have returned to negative territory, the result of higher mortgage rates impacting buyer demand over the last few months. Sales were 0.6% below last month, 17.0% below the same time last year and 14.3% below pre-pandemic levels (September 2017-2019 average) (HMRC).

 

HOUSE PRICES

Nationwide reported a 0.9% seasonally adjusted monthly increase in house prices in October 2023, this resulted in an improvement in annual house price growth, now at -3.3%. Halifax also reported a monthly increase in house prices, rising 1.1%. Annual house price growth improved to -3.2%.

Insights in your inbox
Subscribe to get our latest research, thought leadership, insights, and news.
Subscribe

Insights

Build to rent
Research

Build To Rent Quarterly Report

We are pleased to share with you the latest edition of our quarterly residential insights for the UK. 
Mark Clegg • 25/04/2024
elderly-care-sector-what-the-data-tells-us-about-the-pandemics
Article

Elderly care sector: what the data tells us about the pandemic’s impact on occupancy rates

Two and a half years after the devastating first wave of the COVID-19 pandemic, occupancy rates in the UK’s elderly care sector are returning towards pre-pandemic levels. Leveraging data from our national dataset, we have analysed the challenges faced by elderly care homes since spring 2020
Tom Robinson • 10/11/2022
Residential: Discount For Overseas Buyers In Prime Central London
Article

Residential: Discount For Overseas Buyers In Prime Central London

Despite political uncertainty and a relatively gloomy economic outlook, the wall of capital targeting prime central London (PCL) residential opportunities continues to be robust, with overseas investors continuing to look to deploy money into London. This should be of no surprise, with the sector potentially offering good value for cash-rich investors.
Millie Harper • 26/10/2022

How we can help

Residential - Capital Markets
Our national Residential Investment & BTR team leads the UK market in providing expert advice to investors and developers looking for new residential investment opportunities, or who wish to acquire, develop or dispose of rented portfolios. 
 
Learn More
Capital Markets

Are you ready for what’s next in the real estate industry? Our Capital Markets team advises institutional and private owners, occupiers, investors and developers on their most significant transactions.

Learn More
Healthcare
Delivering Expert Property Knowledge To The Healthcare Industry.
Learn More

Ready to talk?

Get in touch with one of our professionals.
With your permission we and our partners would like to use cookies in order to access and record information and process personal data, such as unique identifiers and standard information sent by a device to ensure our website performs as expected, to develop and improve our products, and for advertising and insight purposes.

Alternatively click on More Options and select your preferences before providing or refusing consent. Some processing of your personal data may not require your consent, but you have a right to object to such processing.

You can change your preferences at any time by returning to this site or clicking on Cookies.
MORE OPTIONS
Agree and Close
These cookies ensure that our website performs as expected,for example website traffic load is balanced across our servers to prevent our website from crashing during particularly high usage.
These cookies allow our website to remember choices you make (such as your user name, language or the region you are in) and provide enhanced features. These cookies do not gather any information about you that could be used for advertising or remember where you have been on the internet.
These cookies allow us to work with our marketing partners to understand which ads or links you have clicked on before arriving on our website or to help us make our advertising more relevant to you.
Agree All
Reject All
SAVE SETTINGS