June sees decline in home sales and mortgage approvals amidst subdued buyer interest
In June 2024, the UK property market presented a mixed picture, with a decline in home sales and mortgage approvals contrasting with a continued rise in house prices across most regions.
Similarly, the Bank of England reported a slight decrease in the number of mortgages approved to finance house purchases in June 2024, down by 0.3% to 59,976. However, the year-on-year figure was 11.7% higher than in June 2023, indicating a longer-term increase in mortgage approvals .
The Royal Institution of Chartered Surveyors (RICS) Residential Market Survey for June 2024 highlighted a relatively subdued market. New buyer enquiries had a net reading of -7%, a slight improvement from -8% the previous month. Agreed sales also showed a marginal improvement, with a net reading of -7% up from -13%. However, new instructions slipped into negative territory, with a fall to -9%, ending six consecutive months of positive readings (down from +13%) .
Contrary to the declines in transactions and mortgage approvals, house prices continued to climb. The Halifax House Price Index reported a 0.8% increase in July 2024, following three relatively flat months. The annual growth rate reached 2.3%, the highest since January 2024, with the typical property now costing £291,268, up from £289,042 in June.
Regionally, Northern Ireland recorded the strongest annual house price growth in the UK, rising by 5.8% in July, up from 4.1% the previous month, marking the highest increase since February 2023. The average property price in Northern Ireland now stands at £195,681. The North West also saw robust growth, with house prices up 4.1% year-on-year, bringing the average price to £232,489. In Wales, house prices grew by 3.4% to £221,102, the highest since October 2022. Scotland experienced a 2.1% rise, with typical property prices now at £205,264.
Commenting on the report Nathan Emerson CEO at Propertymark says:
“It is extremely positive to see further growth within the housing sector, especially following what has been a tough time across the last few years for consumers. With inflation now down at targeted levels and with a very welcome cut in interest rates last week, Propertymark is extremely optimistic to see a real uplift across the housing sector over the coming months. Assuming the economy remains stable in September, it would be good to see the central bank continue to gradually cut interest rates as conditions permit. It is a case of all eyes on the UK Government regarding their housebuilding programme, as well as learning more regarding support for potential first-time buyers.”
The only region to record a fall in house prices was Eastern England, where the average property price dropped by 0.4% annually to £330,282. Meanwhile, London remains the most expensive area to buy a property in the UK, with average prices increasing by 1.2% year-on-year to £536,052.
Iain McKenzie, CEO of The Guild of Property Professionals, adds:
“The property market has seen more twists and turns in the past year than a Simone Biles gymnastics routine, so it’s positive to see some consistent but modest growth. The 0.8% monthly increase and 2.3% annual growth rate are encouraging signs, especially considering the economic challenges we’ve faced over the past year. With the average house price now at £291,268, we’re seeing a gradual but steady appreciation in property values.
The recent Bank of England base rate cut and reductions in mortgage rates are positive developments for the market. These factors should help improve affordability for many potential buyers, especially first-time buyers who have been struggling to get onto the property ladder. However, we must acknowledge that affordability constraints and limited housing stock continue to pose challenges.
We’re optimistic about the market’s direction for the remainder of the year. The combination of lower mortgage rates, potential further base rate reductions, and steady price growth creates a favourable environment for both buyers and sellers.”
Summarising, Anthony Codling, Managing Director of Equity Research at RBC Capital Markets says
“The latest RICS survey suggests that now the election is out of the way the housing market is back to business, demand ticked up in July and this momentum is expected to build over the coming months as Labour keeps housing front of mind and mortgage rates start to fall. The summer months are typically quieter than most, but the scene is set for an autumn selling season which will lead to the housebuilders building more of the homes our country needs.”
