Table of Contents
- Bank of England Keeps Interest Rates Steady
- Navigating House Prices
- Mortgage Rate Movements
- Challenges for First-Time Buyers
- Summary
Within this month’s property market update, we will highlight the house prices, mortgage rates, and how this is affecting the decisions of first-time buyers as well as people looking to move property. We have a lot to talk about!
Bank of England Keeps Interest Rates Steady
On the 7th May 2024 – The Bank of England made the announcement to keep the base rate at 5.25% for the fifth time in a row, with two out of the nine that sit on the board wanting it to be lowered and five wanting the base rate to remain as is. We could potentially see some movement in the base rate in June, fingers crossed!
Navigating House Prices
In April 2024, Nationwide reported that the house prices fell by -0.4%, bringing the annual growth to 0.6%. This indicates that prices have fluctuated but remain at the same level for the past 16 months, showing little difference since this time last year, only a variance of -0.4%. However, forecasts suggest a steady growth in prices by about 2.5% in 2024, which may increase if there is a significant change to the base rate. According to Zoopla, the average house price in the UK is currently £264,500.
However, more recent data from Rightmove indicates that the average asking price for new properties on the market has risen by +1.1% to £372,324, just shy of breaking May’s (2023) record by £540.
Mortgage Rate Movements
With the base rate maintaining at 5.25% prior to the announcement, mortgage providers quickly increased their rates. The latest updates from Moneyfacts on the 1st of May show the average two-year fixed rate has risen to 5.91% and the five-year fixed rate to 5.48%.
Challenges for First-Time Buyers
Nationwide also published results from a survey conducted by Censuswide, stating that 49% of prospective first-time buyers have delayed their plans over the past year to purchase a property. Among the same group, the primary reasons cited for not purchasing include high house prices and increased mortgage rates preventing them from buying.
The survey also highlighted that the cost of living crisis has affected over 84% of potential first-time buyers’ plans to purchase homes. Furthermore, there’s a notable rise in the number of mortgages approved for house purchases, with a 20.1% increase from March 2023 to March 2024, indicating a slow recovery in buyer confidence.
Summary
The property market is seeing a variety of dynamics, from stable to slight increases in house prices and significant jumps in mortgage rates. These factors continue to shape the decisions of market participants, particularly first-time buyers who are most sensitive to these changes.
