With a general election looming and a decidedly disappointing 2023 many experts predicted that 2024 would simply be ‘more of the same’ and as a consequence many of the National news outlets reported forecasts of house prices falling in 2024. However, with inflation lower than expected, it is now widely predicted that, although at the time of writing the base rate remains unchanged since August 2023, there will be a drop in the Bank of England base rate and in fact many experts are now expecting that there will be multiple reductions in the base rate this year. This in turn has lead to competition intensifying among mortgage lenders, with many dropping the rates being offered to attract new business. At the time of writing, according to Moneyfacts, the average 5 year fixed rate mortgage is now only 5.37% and this is expected to continue on a downward trajectory.
But there is more to the housing market than just slightly lower interest rates!
In a career of over two decades I have seen falling and booming markets and there’s always a cocktail of events that cause the biggest swings one way or another. The boom of the early 20’s (2020’s that is) was caused by artificially low interest rates and a pent up demand from years of Brexit uncertainty followed by the Covid-19 pandemic and of course the impact that had on buyers priorities.
So what other aspects are in play at the moment?
It could be argued that the market was curtailed in the final quarter of 2022 and throughout 2023 due to the mini-budget of September 2022 that caused so much disruption and lead to multiple quick increases in interest rates, which caused buyers to be nervous. With Rightmove reporting a 5% increase in the volume of enquiries in the first weeks of 2024 compared to 2023, could it be that some of those who put things on hold are now returning to the market? It certainly seems like it, with Rightmove also reporting an increase in Sales agreed in the first week of 2024 of 20% compared to the first week of 2023.
This increase in buyer activity and the widely predicted change to interest rates has seem some forecasters amend their predictions for 2024, most notably Knight Frank who have gone from predicting a drop in average house prices in 2024 to now reporting that they believe prices will go up by 3% Which in the space of three months is a pretty significant swing in their prediction of 7%.
However, competition among sellers is currently higher that it has been for some time with a higher than typical number of properties already on the market, plus so far this year the number of new instructions is up 15% compared to 2023.
So if you have been thinking about selling, what does all this mean for you?
Well returning buyer confidence is always good news, combine this with falling mortgage rates and the predicted Bank of England base rate drops it is likely we are going to see a much more balanced market than that of 2023, potentially even, dare I say it a sellers market throughout Spring and Summer, after which I suspect things will slow again with the announcement of the general election. With the increasing number of properties likely to be available on the market as we approach Spring it will still be important for sellers to ensure their homes stand out as they compete for buyers attention.
Obviously competitive marketing prices are one solution, but this alone can just lead to a lower sale price. For owners of premium properties (like yours) in particular it will be important to ensure they have the assistance of a specialist agent who has experience in dealing with homes in the upper quartile.
This agent must be able to demonstrate that they are capable of negotiating with savvy experienced buyers and that they have the ability to curate a stunning portfolio of marketing assets and the strategies to ensure the property is then exposed to the widest possible audience. It is important that you are important to the agent and not just another poster in a window, by working with a smaller number of clients the individual agent responsible for your sale will get to know you and will have the time to communicate effectively and regularly with you, giving them the opportunity to offer genuine expert advice at every stage, sadly too many agents and agencies have a ratio of sellers to agents that prevents the necessary level of customer service, which can result in excess stress and a poor sale price.