After an encouraging start to the year with more enquiries, more viewings and stronger sales than in recent years, this month the market has simmered down with sales slightly declining. Nationally, January saw a 23% increase in sales agreed compared to January 2023 and the number of new properties coming to the market was the highest for eight years.
In the first two weeks of January many mortgage lenders reduced rates which brought more activity to the market as the cost of borrowing became more affordable again.
This month lenders have edged their rates back up which has been a surprise to many, particularly as it is so soon after their own initiated rate reductions. The Bank of England have not increased the base rate since August 2023 so this period of stability should really be considered positive in a very turbulent time despite the mortgage lenders changing their rates. The adjusting of mortgage interest rates has highlighted that confidence and affordability are still the two biggest factors controlling the housing market. Despite lower sales levels than January, February has still been a far better month for the housing market than February last year so optimism is still high despite uncertainty.
The country has now officially gone into a recession which could suggest that the Bank of England may finally reduce the base rate but they still have to tread a fine line to ensure a reduction in the base rate doesn’t trigger further inflation. At the moment it feels like the housing market needs clarity so buyers and sellers are able to make qualified decisions.
Next week the Government will announce their budget with much speculation about income tax reductions and potential changes to stamp duty to assist buyers in the short term. We wait to see if the budget offers any assistance to the housing market at this time.
Despite the uncertainty of interest rates and speculation about what might be in the budget, most committed buyers are still continuing to house hunt to find that next property. Opportunities to find the right property are greater with a huge choice of properties on offer.
The signs indicate the market should continue to improve into the spring and summer but at the moment a needed period of stability will breed confidence to enable this to happen.