As someone sensible once said, predicting property prices is a great way to make psychics look reliable. But once a year, the risk of getting it wrong is always low… spring.
Spring officially begins on March 20 – and it is the moment we always start to see green shoots and to see the property market begin to improve noticeably.
Why? It’s a combination of reasons. Of course, the weather is a big factor. Warmer days and longer evenings entice buyers out of winter hibernation.
Thoughts turn to making a move now to enjoy a new, bigger garden or to be nearer a new school in time for September’s new term.
Spring could bring green shoots to the housing market
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This happens every year, whatever the market conditions. We are coming out of one of the worst seasons for anyone hoping to sell.
But this year it looks set to be a spring market like we haven’t seen for a while. Don’t expect the buying frenzy of 2021 but it will be the closest to it we’ve seen for some time.
Lloyds Banking Group has revised its house price forecasts, now anticipating softer price moderation throughout 2024 than was anticipated a few months ago.
A -2.2 per cent decline is now projected, with the possibility of returning to positive growth next year; these revised forecasts reflect a more optimistic outlook for the housing market.
Yet recent statistics compiled by Rightmove show that the average new seller's asking price experienced a 0.9 per cent rise between January and February.
The average prices are now up by 0.1 per cent year-on-year, marking an uptick in market confidence. This increase follows a period of annual declines since August 2023, suggesting a potential turning point in the market.
Data from Moneyfacts also reveals that average rates on both two-year and five-year fixed-rate mortgages have fallen for six consecutive months.
A host of lenders are offering rates below five per cent and even four per cent, whereas in November 2023 no lenders offered fixed rates below this level. Mortgage rates are expected to remain within the four per cent to five per cent range, potentially moving a little lower over 2024.
It all points towards a more balanced and active property market compared to recent months. With increasing buyer demand, improved supply levels, and more favourable mortgage rates, we are cautiously optimistic about the year ahead.
I fully expect that by June we’ll be reading news about house prices going up and the shortage of homes becoming more acute.
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Of course, there are many events politically that could blow things off course, but if they do not we have a combination of events that look set to ignite the market once again.
I have already mentioned the spring bounce. But this year we also need to factor in other positive influences.
We’ve had a number of months with no increase in base rates. There is the likelihood of bank rates reducing soon. We’re seeing pent-up demand from buyers who have taken a ‘wait and see’ approach for the last year or two.
The mad situation in the lettings market means there are too few homes, and rents are at all-time highs. Many who can now buy, will do so to avoid renting.
Fewer properties are being built as developers became nervous last year and cut back on many new building, reducing expected supply. The UK economy has grown slightly, defying the expectation of many. And the cost of labour and materials has eased making it more viable to carry out improvements to a new home.
Taking all this into account you don’t need to be a scientist to work out that as we move from winter into spring the housing market, like the weather, is going to be heating up.
