UK Property Market Update: A Surge in New Listings Amidst Economic Challenges
The UK property market is experiencing a notable shift, with recent data revealing a significant increase in new property instructions. According to the latest Property and Homemover Report from TwentyCi, there were 456,902 new property instructions in Q3, marking an 8.8% rise compared to the previous year. This surge has resulted in the highest supply of homes for sale in six years, indicating a dynamic and evolving market landscape.
Factors Driving the Increase in Listings
The increase in new property listings can be attributed to several factors, primarily the easing of mortgage rates and the potential for further base rate cuts. As borrowing costs begin to stabilize, many homeowners are feeling more confident about entering the market. However, it is essential to note that not all homeowners are selling voluntarily; some are facing “financial duress” due to the impact of higher fixed mortgage rates and declining affordability. This duality of motivations—both opportunistic and forced sales—paints a complex picture of the current housing market.
A Healthy Trajectory for Sales
Despite the challenges, TwentyCi reports that the level of sales agreed in Q3 has returned to a “healthy trajectory.” Sales rose by 23.4% year-on-year, totaling 332,200 transactions. This positive trend is encouraging for estate agents and suggests that the growth in property transactions is likely to continue into the next year. The report also highlighted a 10.9% rise in exchanges, while fall-throughs increased marginally by 4%. This slight uptick in failed transactions is considered normal given the higher volume of sales, with the percentage of failed transactions remaining consistent with last year.
Price Adjustments and Seller Expectations
The data from TwentyCi indicates that 38% of property listings that have ended this year experienced at least one price reduction. This figure is comparable to 36% last year but shows an upward trend from 24% in 2022. Such adjustments suggest that many sellers may have had “unrealistic” price expectations, particularly in certain market segments. As the market continues to evolve, it will be crucial for sellers to align their pricing strategies with current market conditions to attract potential buyers.
The Rise of Rental Properties on the Market
One of the most striking findings from the report is the increase in rental properties being put up for sale, reaching the highest level in a decade. In Q3, 11.3% of all new property listings were homes that had been rented out in the last three years, a significant rise from 6.8% in the same period last year. This trend is particularly pronounced in Inner London, where 47.2% of new for-sale homes had been previously rented.
This influx of ex-rental homes into the market raises concerns about the availability and affordability of rental properties, especially in areas where demand is already high. As affordability constraints tighten, the situation for tenants seeking rental accommodations in London is likely to worsen.
Challenges for Landlords
Colin Bradshaw, CEO of TwentyCi, highlighted the growing challenges faced by landlords in the current market. Aside from rising mortgage costs, landlords are increasingly concerned about potential increases in capital gains tax and compliance demands related to energy efficiency and renters’ rights. The rental sector has become more expensive and unpredictable over the last decade, leading to a significant reduction in available rental properties.
As of September 2024, the number of properties available for rent in the UK has dropped to 259,000, a 22% decrease from 332,000 in September 2019. While the number of new landlord instructions saw a slight reduction of 0.5% in Q3, lets agreed rose by 9%, and lets increased by 7%, indicating a complex interplay of supply and demand in the rental market.
Conclusion
The UK property market is navigating a period of significant change, characterized by an increase in new listings and a healthy trajectory for sales. While the easing of mortgage rates has provided some relief, economic pressures continue to impact homeowners and landlords alike. As the market evolves, it will be essential for all stakeholders—buyers, sellers, and renters—to stay informed and adapt to the shifting landscape. The coming months will be crucial in determining how these trends will unfold and what they will mean for the future of the UK housing market.