Q3 2024 Premium Market Update
The clocks are going back and the impending budget is upon us at the end of October, so you could be forgiven for thinking the market is about to go into hibernation.
However, at the time of writing this article on a cold dark Wednesday morning, UK inflation has just fallen to 1.7%, the lowest rate since April 2021 and below the target of 2%.
Inflation coming down, unemployment remaining low, wage growth, and interest rates dropping in recent times has actually meant the complete opposite to a slowdown in the market with there being a huge bounce back in the market with a rise in new listings, properties available, mortgage approvals, sales agreed, and transaction numbers.
What has this meant for the top end of the market?
Below are some very strong figures on how the top end of the market performed in Q3 2024 compared to the same period in 2023:
There are 15.67% more properties for sale.
New listings are up 8.45%
A 13.11% rise in the number of price reductions.
Sellers returning to the market saw a 42.74% increase.
The number of sales agreed has risen 24.60%.
This is a very strong set of figures and highlights that the bounceback in the market has not just been confined to the core market.
A higher number of new sellers have entered the market as well as previous sellers trying their luck at selling again with a renewed confidence in the air.
It appears that both sellers and estate agents are also reacting to market conditions and acknowledging the extra competition on the market by adjusting the asking prices of unsold properties.
This has caused a domino effect and a rise in buyer activity due to there being more choice of competitively priced properties available for potential purchasers.
As a result, the number of sales agreed has risen significantly in Q3.
However, sellers must remember that whilst there is a quiet confidence in the market, even with lower interest rates, affordability is still stretched compared to a few years ago and these value-conscious buyers have a lot more choice available to them.
Therefore, if they are not seeing value for money they can buy something else or just wait for another property to come along that better suits their requirements.
This would explain why properties withdrawing from the market were up almost 14% and the number of sales falling through were 11% higher.
The top end of the market is showing great signs of recovery compared to a year ago, but it is the serious and realistic sellers that have properties priced aggressively, presented beautifully, and marketed correctly going on to sell in a very balanced market.
The overly optimistic and not so motivated sellers are actually just helping the serious sellers properties sell by making them look much better value for money.
The agents having the difficult conversations with sellers early on and reacting to the ever changing market conditions are achieving some fantastic results.
However, those that are sitting on the sidelines and blaming the market are getting left behind.
In my opinion agents fall into one of two camps; problem solvers or problem finders.
Just remember, if you really want something you’ll find a way to do it and if you don’t, you'll find an excuse.
Moving on to another topic, I recently got back from an incredible trip to Canada and I would 100% recommend visiting if you have never been as it is a beautiful country.
Whilst there, it was nice to see my spending money going a lot further when purchasing items compared to back home in pound sterling using a Monzo card, which is great by the way as you don’t need to carry cash and there are no charges to use it.
However, right at the end of the trip I noticed that my spending power had been impacted slightly and with perfect timing I received a WhatsApp from Steve Eakins saying the pound had dropped 1% in an hour.
I know what you’re thinking, what on Earth has this got to do with my Q3 2024 update.
Steve told me that an international buyer buying a UK property at £1,000,000 in US dollars or Euros had become €12,000 cheaper in just 60 minutes.
This was great news for any negotiations with buyers funding their purchase in US dollars or Euros, but for UK buyers moving abroad, their sterling would not stretch as far post-sale.
However, this could mean more room to increase offers without actually spending more in pounds.
This is valuable information to know as you might be surprised by just how many transactions at the higher end of the market involve overseas buyers, sellers leaving the UK and purchasing abroad, or even UK based buyers that are funding their purchase with money from overseas.
If you like these stats, I would strongly recommend connecting with Steve and keeping an eye out for a podcast I recorded with him recently on this subject that comes out in a few weeks.
I mentioned the budget at the start of this article, which will be the first under the new government and will take place on 30th October with Labour having said difficult decisions will be made on tax, spending and benefits.
Whilst I do not have a crystal ball to predict how the property market is going to react to the upcoming budget, I have analysed the number of mortgage approvals seen over the two months prior and after the last ten budgets since March 2020 to see how the prospect of of an impending budget impacts buyer activity across the market.
On average, the number of buyers entering the market has increased 10.6% following a major budget.
However, when taking the unusual events of both the pandemic boom market and the Truss mini budget out of the equation, the figures show the average boost to mortgage approval levels following a budget sits at 2.9%.
Interestingly, following the catastrophic Truss/Kwarteng budget of September 2022 that saw interest rates sky rocket to a 15-year high and mortgage approvals fall by 22.1%, there was a 19.6% rise in mortgage approvals after the following budget of March 2023 and on average, mortgage approvals have increased by 12.6% after the last three budgets.
In conclusion, just like with elections, an upcoming budget causes some political and economic uncertainty, which the property market does not react too kindly to prior to the event.
However, data shows us that market activity and prices more often than not, moves in a positive direction following an election or major budget, and the recent election is evidence of that with a strong Q3 performance.
This leaves me to sign off with a final message of do not go into hibernation in the final quarter of the year, but double down on your marketing when others will be taking a step back.
You will have to excuse me for this poor golf analogy, but as we move into the colder, windier, rainy months a golf ball does not travel as far as it would do in the heat of the summer.
In this situation, a golfer needs to play a different type of shot by keeping the ball low, under the wind, and hitting an extra club to reach their target.
For any agents reading this, make sure you hit that extra club and leave your competition short of the green whilst you are sitting next to the pin.
Thank you for reading and stay tuned for next month where I will be reviewing how the premium market performed in October and if the upcoming budget impacts activity levels.
Simon Gates - Opening The Gates
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