What impact did the impending Budget have on the premium market in October?

I will be reviewing what immediate impact the result of the budget and recent drop in base rate will have had on the market in my next edition in December, but for now, I’m going to observe what happened to the premium market in the month of October with the uncertainty that lay ahead of what was to come at the end of the month as a result of the budget.

Here are some of my key findings from researching the October data for the premium market compared to the same period last year:

This was an incredibly strong performance in October and follows on from the solid figures I reported for Q3 in my previous article.

I also found that whilst the number of new listings entering the market was down 24.96% on the previous month of September, the number of sales agreed had increased by 14.79%.

It seems as though some sellers might have been put off listing their home in October with the view that the upcoming budget might put buyers off, but this data highlights that there is very much pent up demand in the market and if buyers see value in a property, they will take action and make a move.

There have been so many easy excuses to make in recent months as to why a seller thinks they should not list a home or why their home might not be selling, such as the budget, election, Euro 2024, the Olympics, and school holidays to name a few.

The next excuse will be that Christmas is just round the corner, but the evidence is very clear that competitively priced properties that are marketed in the correct manner will find buyers even in political and economic uncertainty or at different times of the year. 

The market trends have highlighted that as interest rates have continually come down slowly but surely and buyer affordability has improved, activity levels have risen irrelevant of other external factors. 

Now we have average two and five year fixed rate mortgages with a four in front of them and the lowest rates going under 4, this has definitely helped with buying power, thus increasing movement in the market. 

This improved affordability compared to a year ago, saw a fourth consecutive monthly increase for mortgage approvals in September, a 51.5% rise on the figures for the previous September and the highest level seen since August 2022 just before the Truss/Kwarteng budget.

Completed transactions were also up 9% year on year in September and the highest they have been since November 2022.

According to the latest Rightmove House Price Index, it is taking 61 days to find a buyer and a further 152 days to get a sale through to completion.

This means that any transactions completed in September were probably agreed in Q1, months before inflation dropped below 2% and the base rate was reduced to 5%.

Therefore, if transaction numbers were this high from sales agreed in a weaker market several months ago, this is a real positive sign of market activity continuing to move in the right direction as conditions improve.

Strong mortgage approval figures in September would have obviously been before the base rate recently dropped again for the second time this year to 4.75% and also just before the budget was taking place.

If this is anything to go by, mortgage approvals should continue to move in an upward trajectory with the uncertainty of the budget behind us and the base rate sitting at 4.75%. 

We have had so many massive political and economic events over the past decade that could have easily caused the property market to derail, but the market has remained very resilient and we do appear to have now got to a point where the public are saying if they want to move and they can, now is the time to do it.

It will be very interesting to see how the market reacts in the final two months of the year following the budget, but there is certainly a cautious optimism in the air and a just get on with attitude amongst home movers regarding a potential move as interest rates have continued to steadily come down over the past year and there is a lot more choice of property available to buy than there has been in recent years as you can see from the graph above, with stock levels currently at a 10-year high.

As always, thank you for reading and stay tuned for next month where I will be reporting on how the market reacts in November to the budget and base rate reduction. 

P.S. You can CLICK HERE to watch my October UK property market update on YouTube.