Board Insight

Housing Recovery – some reasons for optimism in 2024 – by Tim Jones

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The housing market is critical for us all. Whether you are a buyer or seller. Whether you are an employer needing accommodation for a key worker. Whether you need affordable accommodation or are a first time buyer, these transactions are a major part of our lives.

I have returned again to this subject because there is a glimmer of good cheer in the air.

For those worrying about the cost of renewing a mortgage, or getting on the housing ladder, then the latest announcement regarding inflation – unexpectedly down to 3.9% – has sent money managers into an uncharacteristic burst of optimism about the trend for interest rates. Some have suggested five falls of around 0.25% each over the next 18 months. Before we get too excited someone had better first tell the Governor of the Bank of England who was unfairly described as not fit to predict the date of Xmas.

Nevertheless this has immediately translated into some improved mortgage products. The best I could find in preparing this was the Gen H range who are a specialist lender and are just launching a 3.94% interest rate for their five-year 60% loan-to-value home buying bundle. I haven’t read the small print but this is nearly 2% lower than six weeks ago. This is also the lowest level since the beginning of the Liz Truss term as Prime Minister. It is also encouraging that many of the main stream lenders are now offering products at sub-5% rates for 80% of value.

There is a second piece of good news. For the first time in almost two years most Estate Agents are confident that they will be selling more homes – describing the current conditions as a “relatively positive but modest market recovery”.

We should remember the rollercoaster we have been on. Coronavirus lockdowns triggered a once-in-a-generation rethink of how and where people wanted to live. Perhaps a “race-for-space” might be a good description. The market boomed, agents were selling properties in hours and virtually ran out of houses to sell. Developers could not build houses fast enough. That tap was dramatically switched off after the mini-budget in Autumn 2022. The cliff edge was steep and buyers at all levels disappeared. Inevitably prices started to be squeezed and many analysts predicted a bleak 2024 for potential vendors and particularly for the new home builders.

This trend has however apparently been slowing with only a 1% difference between values in October 2023 and 2024. The “bottom” of the market seemed close (in a sector where we have been used to inflation of 8-12% pa).

This latest news has added to other nuggets which are helping to restore normality. This, perhaps surprising, resilience can partly be attributed to a healthy jobs market and the fact that there has been much more forbearance from lenders thereby removing the distressing cycle of forced sales.

The actual number according to the Halifax shows that, on average, homes in the UK are still worth £40,000 more than they were before the first lockdown.
This is the best good news I have for those entangled in the property market at the start of 2024.