Introducing our quarterly housing market update
We are excited to introduce our quarterly housing market update.
Our in-house Senior Economist, Hansen Lu, provides his commentary on the UK housing market, helping to keep you informed of market trends and key insight
Third quarter 2024 data reveals a nuanced picture of the market, with key indicators pointing towards gradual improvement and stabilisation.
Market Indicators: A Gradual Recovery
The housing market has shown signs of recovery since mid-2024. According to the latest data, house price growth has accelerated slightly, with annual growth rates now hovering between 3% and 5%, up from the negative growth seen last year. This increase is supported by a rise in active buyers, as indicated by the RICS New Buyer Enquiries.
Mortgage Approvals and Housing Transactions
Credit conditions have eased, leading to a 7% increase in mortgage approvals from August to May, and a significant 43% year-on-year rise. However, total housing sales have remained relatively flat, suggesting that the improved credit conditions have primarily benefited mortgaged buyers, potentially sidelining cash buyers.
Credit Conditions: Easing but Still Tight
Mortgage interest rates have continued to decline, with the best deals now dropping to 4% or below. Both Loan to Value (LTV) and Loan to Income (LTI) ratios have also shown improvement. Despite these positive trends, the overall credit conditions remain tight compared to recent norms, indicating that while there is some relief, the market is still adjusting.
Economic Indicators: Inflation and Wage Growth
UK inflation has declined to 1.7% in September, which was below expectations. Wage growth has also moderated to 3.8% per year, and vacancy rates have returned to pre-pandemic levels. These factors contribute to a more stable economic environment, which is crucial for the housing market’s continued recovery.
Regional Disparities: A Rebalancing Act
Regionally, house prices in Northern Ireland, the North of England, and Scotland have outpaced the rest of the UK in recent months. This trend is likely driven by better house price-to-earnings and affordability measures in these regions. As a result, there has been a rebalancing of house prices across the UK, with traditionally cheaper regions partially “catching up”.
Conclusion
With house price growth picking up a little and valuation measures improving, the market has stabilised after a shaky start to the year. For now, still-high prices and interest rates are keeping a lid on the market. But looking to 2025, activity and confidence in the housing market could strengthen further if rates continue to fall.
Implications for Equity Release
These trends highlight the importance of staying informed about the state of the housing market and the overall economic context. The easing of credit conditions and the stabilisation of house prices present opportunities for equity release products, particularly in regions experiencing faster growth.
You can view the full data here.