As we enter a New Year it is always entertaining to see the predictions from across the property industry and elsewhere about what will happen in the year ahead.
Some are given with a great attention to detail, data driven, and usually wrong.
Some are made in a more anecdotal and “off the cuff” fashion, and usually wrong!
Last year we generally prepared for a market that was changing and our best guesstimate was that there would be a reduction in transactions of around 20% and falls in property values from their peak of around 10%.
As we leave 2023, it appears that view was not too far off reality and, if anything, we were slightly pessimistic as, whilst volume levels have reduced by close to our anticipated thoughts, property prices have generally been very resilient and drops in value have, according to many of the national indices, remained in single digit percentages.
National and average figures can, of course, be misleading as the market is made up of hundreds of local markets and with the individual circumstances of sellers and buyers also contributing greatly.
Our prognosis for lettings was of a largely static market in terms of transactions but with opportunities for landlords to grow returns from increased rent, largely created by a continuing imbalance between supply and demand.
During the year we have seen the average length of tenancies increase and rents rising due to competitive pressures of a lack of supply. Some landlords have chosen to exit the market and this has increased the pressure on existing stock levels.
Our views on 2024 are that it looks set to continue in a similar vein as at present. Inflation figures recently announced have been encouraging and the Bank of England is, hopefully, looking now at the likelihood of a base rate reduction rather than further increases. They have the unenviable task of trying to curb inflation whilst not stopping economic growth.
We have already seen the shock of mortgage rate rise and, whilst the full effect of these increases may yet to be felt by many, lenders have been “stress testing” borrowers since the financial crash and so, whilst it may impact the ability of people to move, we are unlikely to see a significant rise in distressed sales.
Housebuilding will likely remain at levels considerably below those needed to satisfy demand.
There are always people that need to move – employment, death, divorce, family, financial are all key drivers of activity.
Lettings will continue with an imbalance between supply and demand and, although affordability will likely stop rents rising at the pace they have, there will continue to be a strong and fast moving market albeit, at best, static in volume terms . Small landlords exiting the market will likely continue adding to the supply and demand imbalance.
Our views on 2024 are therefore that transactional sales volumes will remain at around current levels or perhaps increasing slightly with prices continuing to edge down a little further but by no more than 5%.
Finally, may we take this opportunity to wish you a Happy, Healthy and Successful New Year and, as always the team is here to help you with your moving plans.