As the festive season approached, housing market experts were noting the persistent impact of mortgage affordability on house prices, a trend that is anticipated to continue into the new year. Savills, a prominent estate agency, projects a modest average decrease of 3% in UK house prices for 2024. However, the agency also observes a resurgence in buyer confidence, partly fueled by declining mortgage rates.
Recent insights from Savills, derived from a survey involving over 1,400 potential buyers and sellers, indicate an upswing in the intent to move homes within the next half-year. The survey, which concluded last week, revealed a net balance of 30% of participants expressing a heightened commitment to relocating, a significant rise from the 14% recorded in July 2023.
This renewed interest is notably pronounced among buyers reliant on mortgages, as the prospect of securing loans at reduced rates becomes increasingly viable. The survey shed light on the primary motivations driving the decision to move in 2024. A majority, 57%, expressed a desire to progress with their lives, while 31% recognized improved affordability or a stabilising property market. Additionally, 12% preferred to invest in property rather than other avenues.
Frances McDonald, a research analyst at Savills, noted the alignment of their findings with the latest RICS data from December, which highlighted the strongest level of new buyer enquiries since April 2022. The survey also delved into the specific motives of first-time buyers, with 32% indicating they had accumulated sufficient savings for a deposit and 26% preferring homeownership over spending on rent.
For those considering downsizing, 47% are motivated by the excess space in their current homes, while 15% aim to unlock equity for retirement, and 12% seek proximity to local amenities and transport.
McDonald remarked, “Most prospective buyers are also not in a position in which they feel they need to alter their budget. When asked if the amount they are looking to spend has changed compared with three months ago just 14% said they were reducing budgets, while almost as many people were looking to spend more. Almost one in eight are fortunate enough to be in a position to reduce borrowing without affecting their budget, and instead plan to increase the use of cash or equity.”
The report highlights that cash purchases represented a significant 43% of transactions in 2023, a noticeable increase from the 35% pre-pandemic. While the average UK house price is expected to dip by 3% in 2024, prime markets, less dependent on borrowing, are predicted to rebound more swiftly. In particular, prime central London is set to lead the recovery with no anticipated price declines, while prime regional markets are projected to experience a modest decrease of 1.5%.
Savills concludes with an optimistic outlook for 2024, suggesting it could be an opportune moment for prospective buyers and sellers to make their move in the property market.