The early signs in 2024 suggest that the market has turned the page on an unstable 2023. Falling mortgage rates have been the primary catalyst, tempting last year’s missing movers to restart their property search. Consequently, more households were looking to buy last month than in any January over the last decade, including the start of both 2021 and 2022.
First-time buyers and second steppers, who tend to be most reliant on mortgage finance, are at the forefront of the recovery. This injection of demand is starting to stabilise house price falls, particularly for mid to lower-priced homes, which in turn should improve selling conditions further up the chain as the year progresses. That said, the affordability picture is still more challenging than it was a few years ago which will keep a tight lid on price growth.
PRICE REDUCTIONS
There’s been a steep fall in the number of price reductions. In January, sellers were less likely to cut their asking price than at any time over the last eight months. 48% of homes sold in January across England & Wales had been subject to a price reduction, down from a peak of 55% in October 2023. This marked the first time since June 2023 that less than half of homes had sold following a reduction and suggests that more homes coming onto the market are competitively priced from the start.
On average, these homes had been on the market for 80 days before the seller dropped the price. This reflects the fact that sellers have taken time to adjust to shifts in the market throughout 2023. However, over a quarter (27%) of these homes then went on to sell above their final asking price, the highest share since October 2022.
Homes sold between £250k-£500k saw the biggest fall in price reductions. These properties are often bought by both first-time buyers and second-steppers who are returning to the market as lower mortgage rates enable them to borrow more to afford the home they want. In London and the South, where homes are more expensive, the recovery has come at a slightly higher price point.
ACHIEVED PRICES
The gap between what price sellers wanted for their homes and what buyers were prepared to pay continued to close in January as lower mortgage rates and a stable economic backdrop unlocked demand from buyers who put their moves on hold last year.
The average seller in England & Wales sold their home last month for 98.9% of their asking price, up from 98.5% in both December 2023 and January 2023. This marked the third month of improvement for asking to achieved prices and meant that sellers achieved closer to their asking price than in any month since May 2023, just before mortgage rates peaked.
First-time buyers and movers led the charge. Meanwhile, those purchasing buy-to-lets and second homes remained more price-sensitive.
On a regional basis, sellers in the East of England saw the biggest annual improvement in asking to achieved values. Last month, the average seller in the East of England achieved 98.8% of their asking price, 1.2% up on January 2023. Sellers in the South West saw the second biggest uplift.
Meanwhile, Yorkshire and The Humber and the West Midlands were the only regions where sellers continued to trade at more of a discount than this time last year. These markets saw some of the strongest price growth post-Covid.
DAYS TO SELL
With more buyers around, new homes coming onto the market are selling quicker than they were last year. 9% of homes that came onto the market in January sold within a week, up from 6% in January 2023. However, given that many buyers and sellers are still trying to adjust to the market, this figure remains considerably lower than in January 2021 when 19% of homes sold within a week.
That said, the pool of unsold homes last year continues to weigh on the overall time to sell figures. The average home that sold last month came onto the market 82 days previous, the slowest January to sell in a decade. However, this is a more backward-looking metric which predominantly reflects the fact that homes that had been on the market for some time began to sell in January. 86% of homes that sold last month came onto the market before the New Year. This compared to 78% of homes sold in January 2019. We expect this time to sell figure to continue falling as the year progresses.
