Following the Halifax HPI announcement that saw average house prices rise by +0.4% in February, industry experts have shared their thoughts with IFA Magazine.
Nathan Emerson CEO at Propertymark comments: “The start of 2024 continues to look positive for many homeowners who are hoping to sell their home or jump on the property ladder. Our member agents reported that there has been an 89 per cent increase in new properties coming onto the market and a 129% in the number of market appraisals undertaken.
“The Bank of England recently stated that the central bank does not have to meet its target of cutting inflation down to two per cent before they start cutting interest rates. In order to persuade more people this is the year to sell their home, the Bank of England should start considering reducing interest rates to ease borrowing costs for aspiring homeowners who deserve some economic confidence after experiencing turbulence since 2020.”
Aaron Milburn, UK Managing Director at credit intelligence provider Pepper Advantage, said: “The fifth consecutive month of rising house prices further demonstrates that the UK mortgage market is coming back to life. Buyers that were put off by higher rates are slowly returning in light of lower fixed rate offerings and easing inflation, but the drop in growth reflects the tenuous nature of this recovery. Demand for housing outstrips supply, and affordability remains a challenge for many, especially first-time buyers. We continue to see certain borrower segments weighed down by cost pressures as savings dwindle in the face of continued economic uncertainty, which could weigh on house prices in future. Much depends on the Bank of England’s decision later this month.”
Tom Brown, Managing Director, Real Estate at Ingenious, said: “The UK property sector continues to demonstrate its resilience and popularity in the face of high inflation and higher borrowing rates. Nationally, there remains a significant shortage of housing inventory across most locations and price points. Consequently, any slow-down in sales volumes from homeowners is likely to be offset by increased demand from renters and investors.
“However, it’s essential to note that the situation is not uniform throughout the country and across all price ranges. When analysing opportunities, it is key to understand the underlying subsectors and regional dynamics. Taking too broad a view of the market can be misleading. For instance, the institutional housing sector has experienced fewer disruptions compared to the residential sector due to its long-term investment horizon, rental growth and substantial capital inflows.
“We are continuing to work with borrowers and investors and delivering for them. The dynamic landscape of the markets that we serve, and the wider economy requires us to evolve to stay relevant in addressing diverse challenges including the climate crisis, and changes in the way we are all living. Ingenious is broadening the reach of our widely embraced development lending product. This expansion aims to offer extended terms for stabilisation to specialised developers within the rental sectors. Additionally, special lending terms will be introduced for developers with a specific focus on minimising embedded carbon in their construction practices.”
Daniel Austin, CEO and co-founder at ASK Partners, said: “Today’s data shows that the property sector is showing signs of recovery. With a decline in inflation YoY and the peaking of interest rates, the overall outlook has considerably improved. Rent values have seen sustained growth, positioning real estate as reasonably valued in comparison to gilts and presenting growth potential. In the realm of commercial real estate, factors like physical condition, location, and age significantly influence a property’s value. Well-maintained properties boasting modern amenities tend to command higher prices, while neglected ones may struggle to attract tenants or investors. In the current market, the emphasis has shifted towards the importance of location and quality over the yield on debt or cost. We anticipate opportunistic acquisitions of prime properties in prime locations.
“A survey conducted by the Royal Institute of Chartered Surveyors (RICS) uncovered that non-traditional market segments, such as aged care facilities, student housing, data centres and life sciences real estate are yielding the most robust returns. Although the lead-up to the general election may pose some uncertainty, a subsequent boost in productivity and a decrease in interest rates are expected. The hope is that any new government can address local planning issues to stimulate construction and guide the economy out of the downturn.
“As a debt provider, at ASK our focus will be on supporting the best sites in prime locations with well-capitalised sponsors who understand their product. Following this strategy, we aim to bolster developers’ initiatives by adopting a flexible underwriting approach, thereby continuing to offer opportunities for the growing number of private individuals opting to invest in property debt.”
Iain McKenzie, CEO of The Guild of Property Professionals, comments: “The property industry is benefitting from a renewed sense of confidence among buyers that now is still a good time to purchase their next home.
“Inflation is coming down from its peak last year and better mortgage deals are popping up from lenders.
“Concerns of affordability still remain and household budgets are squeezed. Any improvement in house price growth should always be tempered by understanding this does make it more difficult for buyers to get themselves on the ladder.
“It was disappointing to see no new incentives for first-time buyers in the Spring Budget. In the run up to the announcement we were hoping to see a 99% mortgage scheme, or an updated version of the help-to-buy initiative, but we were left wanting more.
“The cut to capital gains tax could have the potential benefit of easing the shortage of housing stock that persists in many areas of the country. Landlords looking to market their property for sale and benefit from the tax cut could bring more available homes onto the market.”
Matt Thompson, Chestertons’ Head of Sales, says: “Buyers have become increasingly confident since the end of last year when interest rates were held at 5.25% and mortgage rates started to come down. This sentiment carried through to January and February 2024. Meanwhile, sellers have also been feeling more optimistic about attracting the right buyer for their home which has led to a slight increase in the number of properties being put up for sale.”
Nicky Stevenson, Managing Director at national estate agent group Fine & Country, said: “House prices ticked up for the second month of 2024, and activity in the property market is building up nicely in time for one of the busiest times of year.
“Mortgage approvals are at their highest levels since October 2022, suggesting there is pent-up demand from buyers who had been delaying a move.
“It will be interesting to see whether the Chancellor’s capital gains tax cut announcement in the Budget encourages teetering landlords to sell their properties.
“A rush of new listings would inject more energy into the housing market and may reignite demand from first-time buyers who have been struggling to afford a home in this high interest rate environment.
“With the base rate stuck at 5.25%, pricing realistically remains important, especially to sellers who want to move quickly.”
