Has the new government had an impact on the premium property market?
The UK’s political landscape may have changed, but when it comes to the premium property market, it’s business as usual. If you’re considering buying or selling a high-end home, you might be wondering how the new government has affected the market.
The good news? The luxury property sector is not only resilient—it’s thriving. Let’s dive into the numbers and trends to understand why now might be the perfect time to make your move.
Market resilience and growth
Despite the recent political changes, the premium property market, particularly for homes priced over £1 million, has shown remarkable stability. In July, new listings were up by 10.4%, and the number of properties for sale increased by 17.6% compared to the same period last year. Even more impressively, sales agreed jumped by 24.37%. These figures aren’t just an anomaly—they’re also above the six-year average for July, indicating strong market confidence and a typical post-election bounce.
What does this mean for buyers and sellers? Simply put, the market is active, and demand remains strong. The number of sales being agreed is nearly 2.5 times higher than the number of new listings, a clear sign that buyers are keen and positive sentiment has returned in full force.
Rising house prices
Another positive indicator is the latest UK House Price Index for June 2024, which reported an annual price increase of 2.7% and a monthly rise of 0.5%. The average UK house price now stands at £287,924, just slightly below the peak of September 2022. For those who have been waiting on the sidelines, this steady growth suggests that the market is not only recovering but continuing to flourish.
The interest rate factor
Interest rates have been a hot topic lately, and they’re crucial when deciding the right time to buy or sell. Interestingly, while interest rates have fluctuated, the interplay between rates and house prices has created opportunities. For instance, if you were considering buying a £1 million property with a 75% loan-to-value (LTV) mortgage in August 2023, the interest rate was around 6.32%. Fast forward to August 2024, and that rate has dropped to 5.05%. This reduction would mean your monthly mortgage payments could be 9.15% lower.
However, while waiting might save you on monthly payments, the overall cost could be higher due to the increase in property prices. Delaying a purchase could have cost you around £21,528, even after accounting for the savings on mortgage payments.
The takeaway? The adage “Don’t wait to buy property; buy property and wait” holds true. While it’s tempting to hold out for further drops in interest rates, the potential increase in property values could outweigh the benefits of waiting.
The market outlook
The UK property market has shown incredible resilience over the past few years, despite challenges such as rising interest rates and inflation. With the Monetary Policy Committee’s recent decision to reduce the base rate from 5.25% to 5%—the first cut in over four years—there’s optimism in the air. If forecasts hold, we could see further reductions in the base rate, possibly down to 4% by the end of next year.
While this might suggest that buyers could benefit from waiting, it’s important to remember that competition in the market is likely to increase as more buyers take advantage of lower rates. This increased demand could drive house prices even higher.
What’s next?
If you’re considering a move, now is a fantastic time to act. The market is in a strong position, and waiting too long could mean missing out on favourable conditions. Whether you’re looking to sell or buy, staying informed and proactive is key.
For those selling, it’s a great opportunity for your estate agent to update your marketing strategy and reach out to potential buyers through various channels, including social media, video content, blogs, and direct communications.
If you would like to discuss the current property market in more detail, or if you are interested in buying or selling a property, why not get in contact with By Design today to see what we can do to help.
Research by Simon Gates - Opening The Gates
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