In September, UK house prices surged by nearly £3,000, as reported by Rightmove. The average asking price for a home increased by 0.8%, reaching £370,759. This rise is notably higher than the long-term average increase for this time of year, which is typically around 0.4%.

Factors contributing to this boost include the recent drop in mortgage rates, an increase in available properties, and faster growth in household earnings relative to inflation and house prices.

The UK property market continues to evolve, with significant developments affecting buyers, sellers, landlords, and tenants. This latest property market update from the Quealy & Co team looks at the latest trends, and expert insights, offering an overview of what to expect in the coming months.

Interest rates held at 5% but 'on the path down'

Interest rates are "now gradually on the path down", the Bank of England governor has said after borrowing costs were held at 5%.

The decision to hold interest rates, which was widely expected, follows a cut from 5.25% in August - the first reduction since the onset of the pandemic in 2020. Andrew Bailey said inflation had "come down a long way" but warned the Bank would need to see more evidence that it will remain low before cutting rates further. The decision to hold rates comes as prices continue to rise slightly faster than the Bank's target, with inflation remaining at 2.2% last month.

Experts are predicting the Bank will cut rates further in November. There are two more interest rates decisions this year. The base interest rate dictates the rates set by High Street banks and other lenders. The higher level has meant people are paying more to borrow money for things like mortgages and credit cards, but savers have also received better returns.

Buying: A Mixed Outlook

For prospective buyers, the market presents a mixed outlook. On one hand, the reduction in the base rate will lower mortgage costs, making property more accessible, especially for first-time buyers. Additionally, the slowing rate of house price growth may create more opportunities to purchase at lower prices.  

Buying Tips for September 2024:

1. Shop Around for Mortgage Deals: With the base rate reduction, lenders may offer more competitive mortgage deals. It’s advisable to consult a mortgage broker who can help you find the best rates tailored to your financial situation.
2. Consider Fixed-Rate Mortgages: Given the current economic uncertainties, locking in a fixed-rate mortgage could provide stability in monthly payments, protecting you from potential future interest rate hikes.
3. Focus on Affordability: Ensure that your mortgage repayments are affordable even if your circumstances change. Lenders are increasingly stringent with affordability checks, so it’s wise to budget conservatively.

However, high living costs and tighter lending criteria continue to pose some challenges. Lenders have become more cautious, particularly in assessing affordability. The Bank of England's latest data shows that the average mortgage approval rate has dropped by 10% year-on-year, reflecting a more stringent lending environment.

Selling: Adjusting to New Realities

For sellers, September 2024 brings a need for realistic expectations. Zoopla reports that the average time to sell a property has increased to 60 days, up from 45 days a year ago.  

Selling Tips for September 2024:

1. Price Competitively: In a cooling market, pricing your property correctly is crucial. Overpricing can lead to your property sitting on the market for longer, which may deter potential buyers.
2. Enhance Kerb Appeal: First impressions matter. Simple improvements like a fresh coat of paint, tidy landscaping, and minor repairs can significantly increase your home’s attractiveness to buyers.
3. Stage Your Home: Consider professional home staging to make your property more appealing. Well-staged homes often sell faster and at a better price.
4. Be Flexible with Viewings: The more accessible your home is for viewings, the more potential buyers you can attract. Being flexible with scheduling can help attract offers faster.

Sellers are advised to price their properties competitively. With more properties available on the market, buyers have greater choice. It’s also important for sellers to be mindful of the condition of their homes; properties in good repair and presented well are more likely to attract serious offers.

For sellers interested in tracking house prices, several sources provide valuable insights:

• Halifax publishes a monthly house price index based on its mortgage data.
• The Office for National Statistics (ONS) uses data from the Land Registry to offer the most accurate measure of house prices, though it has a three-month delay.
• Nationwide and Zoopla also track house prices. Nationwide reported a 0.2% decrease in August but a 2.4% annual increase, with average prices at £265,375. Zoopla's data showed a 0.5% rise in July, with average prices now at £266,400.

Each of these sources uses different methods to track prices, so it’s beneficial to consider them all for a comprehensive overview of the market.

Landlords: Navigating New Regulations

Landlords are facing a challenging landscape in Autumn 2024, with new regulations and rising costs. The Renters' Reform Bill, expected to come into effect later this year under the new Labour government, is one of the most significant changes. This bill aims to abolish Section 21 ‘no-fault’ evictions, strengthen tenants' rights, and improve the quality of rented accommodation.

Additionally, the Energy Performance Certificate (EPC) requirements are tightening, with all rental properties needing to achieve at least a C rating by 2030. This means that landlords may need to invest in energy-efficient upgrades, which could be costly. On the flip side, the reduction in the base rate may provide some financial relief for those with mortgages on their rental properties.

Landlord Tips for September 2024:

1. Stay Ahead of Regulatory Changes: With significant legislative changes on the horizon, landlords should stay informed and ensure compliance. Consider joining a landlord association for updates and support.
2. Invest in Energy Efficiency: Upgrading your property to meet the new EPC requirements not only ensures compliance but can also make your property more attractive to tenants. Government grants and incentives may be available to help offset some of the costs.
3. Review Your Financing: With the recent reduction in the base rate, it may be a good time to review your mortgage arrangements. Refinancing could improve your cash flow and profitability.
4. Focus on Tenant Retention: In a competitive rental market, maintaining good relationships with existing tenants is key. Consider offering incentives such as flexible lease terms or minor property improvements to encourage long-term tenancies.
5. Consider Professional Management: If managing the increasing complexities of being a landlord becomes overwhelming, consider hiring a professional property management company. They can handle everything from tenant screening to maintenance, ensuring your property remains compliant and profitable.

Lettings: A Strong Demand but Pressured Supply

The lettings market remains robust, driven by strong demand and a limited supply of rental properties. According to data from Rightmove, average rents across the UK have increased by 6.8% over the past year. The shortage of rental properties, coupled with landlords exiting the market due to increasing regulation and costs, has led to intense competition among tenants.

For tenants, this unfortunately means higher rents and more competition, making it sometimes challenging to secure affordable accommodation. For landlords, the high demand presents an opportunity, but it also comes with the responsibility to comply with the new regulations and maintain properties to a high standard.

A Time of Transition

This is a period of transition for the UK property market. The reduction in the Bank of England’s base rate in August offers potential benefits, particularly for buyers and landlords, but it is set against a backdrop of economic uncertainty and regulatory changes. Whether you're buying, selling, or renting, staying informed and being prepared to adapt to these changes will be key to navigating this evolving market successfully.

Quealy & Co are your local estate agents in Kent. We are delighted to bring you our property market updates each month. If you are thinking of buying, selling or letting a property in Kent, please get in touch.

Call us 01795 429836 or email hello@quealy.co.uk 

You can also use our instant online valuation tool if you want a ballpark figure of your home's value: Click here