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Friday Feels: Exploring Trends in the Current Property Market

Property Market Trends - The Bridging Group

In the dynamic landscape of the British property market, several key trends are shaping the experiences of buyers, sellers, and investors alike. Let's delve into the intricacies of these trends and their potential impact on the real estate landscape.

First-Time Buyer Frontiers

The year 2023 marked a significant milestone as first-time buyers (FTBs) accounted for a record 28% of transactions across Great Britain. This surge, however, unfolded against the backdrop of higher mortgage rates. Interestingly, intergenerational support, often in the form of financial assistance from parents or grandparents (often called Bank of Mum and Dad or simply BOMAD), played a pivotal role in helping FTBs take their first steps onto the property ladder.

Market Conditions and Property Development

The pulse of the property market is intricately tied to the conditions influencing property developers. In the coming 18 months, a potential slowdown in the supply of new homes is anticipated due to current market conditions and cost pressures on developers. Discussions surrounding the return of schemes akin to Help to Buy underscore the fluid nature of market dynamics and government interventions.

Baby Boomers' Influence on Equity

The Baby Boomer generation, representing a substantial 36% of households, holds a unique position in the property market. With most of their wealth tied up in property, Baby Boomers are not only downsizing but also leveraging their property equity to support the next generation. This intergenerational transfer is expected to play a significant role in 2024.

Trends in Property Types and Sizes

The market has witnessed an intriguing trend where the prices of flats are outpacing those of houses in certain locales. This shift is influenced by higher mortgage rates, prompting a surge in demand for smaller, more affordable properties. Consequently, larger properties, which experienced a boom during the Covid era, might see price falls as households either renovate or explore less expensive neighbourhoods.

Financial Markets and their Crystal Ball

The crystal ball of financial markets suggests expectations of sustained higher interest rates. While this has tempered house price growth, it has led to an unprecedented event – rents rising at a pace four times faster than house prices over the next four years. This shift in the rental landscape signals a unique dynamic in recent market history.

Election Anticipation and Market Sentiments

As the political landscape gears up for a general election, the property market usually experiences a modest pre-election slowdown. However, the current ideological alignment between the leaders of the two main parties suggests a potentially different narrative. As more details from party manifestos emerge, any lingering uncertainties are expected to dissipate.

Halifax House Price Index and Counter Narratives

Contrary to expectations, the Halifax House Price Index reported an unexpected 1.1% monthly rise in October. While this brought relief, attributing it to a lack of property stock rather than an increase in buyer demand introduces a nuanced perspective. Annual improvements, despite ongoing challenges, hint at the market's potential resilience.

RICS Warnings and Market Realities

The Royal Institution of Chartered Surveyors (RICS) paints a cautionary picture. High mortgage rates and the cost of living crisis have dampened demand in the housing market. Indicators on listings, sales, and house prices remain in negative territory. The average time taken for sales to complete has also increased, reflecting the subdued buyer activity.

Falling House Prices

Zoopla's insights add another layer to the narrative, indicating falling house prices across 80% of the UK. The cost of living crisis, impacting demand and buyer budgets, has led to a significant shift. Average mortgage rates, hovering around 5-6%, present a stark contrast to the 2% rates witnessed at the beginning of 2022.

In summary, these multifaceted trends depict a property market navigating the intersection of economic forces, generational dynamics, and political landscapes. As we navigate the complexities, Friday feels a bit different in the world of property – a mix of optimism, caution, and the ever-present influence of market dynamics.



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