Property Market Update: March 2024

Welcome to the March edition of the Property Market Update! We've collated information from experts from across the UK to provide you with a comprehensive view of the current market.

On Wednesday 6th, Chancellor of the Exchequer, Jeremy Hunt, announced the Government’s Spring Budget. In an hour-long session, the Chancellor covered a lot of ground - but in this update, we bring the focus back to property.

Average house prices are just 3% behind their all-time high of summer 2022 according to Nationwide, citing an increase of £2,764 in average house prices to £260,420 (February.) Halifax continues this positive trend, with average house prices up by 0.4% in February, the fifth monthly rise in a row. According to the bank’s data, the average UK property is £291,699.

Mortgage rates have risen marginally since last month, with the average two-year fixed rate now 5.74%, and the average five-year fixed rate, 5.18%, according to Mojo Mortgages.

Spring Budget: Key takeaways

Last Wednesday, Chancellor Jeremy Hunt presented the Government’s Spring Budget to the House of Commons. The budget was pretty broad, but we’ve narrowed down the bits concerning property:

• Multiple Dwellings Relief abolished: People who purchase more than one dwelling in a single transaction can no longer claim Stamp Duty relief
• Furnished Holiday Lettings regime abolished: Second homeowners can no longer deduct mortgage interest from their rental income or pay lower CGT when they sell
• Higher rate of Capital Gains on property sales drops: To stimulate the housing market, the higher rate of CGT drops from 28% to 24%. It’s worth noting that you only pay CGT on second homes

By abolishing Multiple Dwellings Relief and Furnished Holiday Lettings, the Government is taxing the more affluent members of society to subsidise their well-publicised tax cuts. Unless you’re a landlord who owns more than one dwelling, most of these changes aren't that relevant to you.

Although there were grumbles about the Government's lack of attention to the current housing crisis, most experts expected tax breaks to be the driving force of the Spring Budget. With a potential Labour government on the horizon, many are speculating just how much Labour will commit to its pledge to build thousands of new homes.

Average house prices continue to grow despite growing regional disparity

Nationwide reported that average house prices are just 3% behind their all-time high in summer 2022 citing an increase in average house prices from £257,656 (January) to £260,420 (February). Halifax continues this positive trend, with average house prices up by 0.4% in February (£291,699), their fifth monthly increase.

On a regional scale, prices are falling in five regions but rising in 7, according to Zoopla. Five regions in the South are seeing prices fall, with the East of England leading the way at -2.1%. However, house prices are rising in the remaining four regions of England, as well as Wales, Scotland and Northern Ireland.

Asking price reductions remain above average

South East England and the East of England are seeing the most asking price reductions at 5% or more. While there are fewer asking price reductions than this time a year ago, they remain above average. Higher mortgage rates and cost of living are, by and large, the biggest reasons for this.

As noted in previous updates, the areas where we’re seeing the most reductions are areas that were once popular in the pandemic’s ‘race for space’. Second steppers and first-time buyers are being more conservative with their choices, opting for smaller properties.

Mortgage rates stabilise around four to five percent

Average mortgage rates rose in February, but only slightly. The average two-year fixed rate mortgage is up 0.21% (5.56% to 5.74%), whereas the average five-year fix is up 0.11% (5.18% to 5.29%). *Mojo Mortgages

The steady decline in rates, seen from November through to January, is clearly over. And while we may see some further price falls as providers compete with one another, it’s unlikely that they’ll fall beyond 4%.

While interest rates are still finding their footing, the latest Bank of England data shows the number of mortgage approvals for house purchases increased in January by 7.2% to 55,227. Year-on-year, this January figure was 40.2% higher than January 2023, indicating stronger consumer confidence.

The next Bank of England Monetary Policy Committee (MPC) meeting is on the 26th March. We will hear then whether the MPC is any closer to lowering the base rate - though this early in the year, it remains unlikely!

Summary: Marching on

Don't forget - March sees the highest competition for available homes, making it the strongest month to sell. This supports a long-established theory that Spring-time is the best period to take your home to market. Make of that what you will!

Thanks for reading, we'll be with you next month for more market news.