Housing market rebounds as buyers return

Housing market rebounds as buyers return

9:05 AM, 23rd February 2024, About 3 months ago

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The UK’s housing market showed signs of recovery in January as lower mortgage rates encouraged more buyers to resume their property search.

That’s according to Hamptons, who say that the search is being led by first-time buyers and second-steppers who rely on mortgage finance.

Aneisha Beveridge, the firm’s head of research, said: “The early signs in 2024 suggest that the market has firmly turned the page.

“Falling mortgage rates have been the primary catalyst, tempting last year’s missing movers to restart their property search.

“Consequently, more households were looking to buy last month than in any January over the last decade, including the start of both 2021 and 2022.”

Increased demand has helped to stabilise house price falls

Ms Beveridge added that this increased demand has helped to stabilise house price falls, particularly for mid to lower-priced homes.

However, she warned that the affordability picture is still more challenging than it was a few years ago, which will keep a tight lid on price growth.

Hamptons also reports that sellers have become more realistic about their asking prices, as the number of price reductions has fallen sharply.

In January, only 48% of homes sold across England and Wales had been subject to a price reduction, down from a peak of 55% in October 2023.

This marked the first time since June 2023 that less than half of homes had sold following a reduction and suggests that more homes are competitively priced from the start.

Biggest fall in price reductions

Hamptons says that homes sold between £250k-£500k saw the biggest fall in price reductions.

These properties are often bought by both first-time buyers and second-steppers who are returning to the market as lower mortgage rates enable them to borrow more to afford the home they want.

The gap between what price sellers wanted for their homes and what buyers were prepared to pay continued to close in January as lower mortgage rates and a stable economic backdrop unlocked demand from buyers who put their moves on hold last year.

The average seller in England and Wales sold their home last month for 98.9% of their asking price, up from 98.5% in both December 2023 and January 2023.

This marked the third month of improvement for achieved prices and meant that sellers achieved closer to their asking price than in any month since May 2023, just before mortgage rates peaked.

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