April brought with it mortgage rate hikes to go along with an uptick in housing market activity, according to OnTheMarket’s latest Property Sentiment Index. The pace at which homes are being sold remains consistent.
The mood in April seemed quite consistent, with a small boost in seller optimism paralleled by a minor dip in buyer confidence. This might suggest a shift away from what has been a primarily buyer-favoured market over the last year.
- 64% of active buyers in the UK were confident they would buy a home within the next 3 months
- 61% of home sellers in the UK felt assured they would sell their property within the next 3 months
- 41% of homes were marked as Sold Subject to Contract (SSTC) within 30 days of being listed, a slight decrease from March’s 45%
- The speed at which homes are selling continues to be strong, contrary to the slow market toward the previous year’s end
Jason Tebb, President of OnTheMarket, shares further insights from the recent report:
The housing market gained speed in April, partly due to better weather, an increase in property listings, and more interest from potential buyers. Nevertheless, the market experienced unwelcomed mortgage rate hikes due to lenders passing on higher funding costs to borrowers after a period of absorbing these increases.
The rise in mortgage rates has caught many financially strained buyers off guard, especially since they were anticipating rate reductions after previous holds by the Monetary Policy Committee. Nevertheless, recent market shifts have put the prospect of rate cuts in doubt, suggesting at most two or three this year instead of the originally forecasted multiple cuts. This change has driven up Swap rates, which impact fixed-rate mortgage pricing, leading to higher mortgage rates from lenders.
Whether elevated mortgage costs will dampen buyer confidence remains to be seen. April held steady with minor variations in confidence levels between buyers and sellers: a slight raise from 60% to 61% in seller confidence and a minor decrease from 65% to 64% in buyer confidence regarding their ability to transact within the next three months.
Confidence levels between buyers and sellers have diverged over the past six months, showing a balance shift from a dominant buyer’s market towards equilibrium. The uncertainty in the UK, including interest rates, inflation, election timing, and broader international issues, may be affecting buyer’s certainty.
With a deceleration in yearly house price growth reported by Nationwide in April, buyers are not willing to pay just any price for property. Nationwide also shares that many would-be homebuyers are postponing purchase plans. While certain locations witness bidding contests over desirable homes due to low stock, other places see buyers driving hard bargains, particularly because borrowing has become pricier. Mortgage concerns remain stable with a slight decrease in anxiety levels compared to March, which shows mortgages may not be the primary reason for the slight dip in buyer confidence.
41% of homes went SSTC within 30 days of listing in April. This reflects an improvement from the sluggish market activity observed late last year, thanks to lower past mortgage rates and a rise in positivity. The market is shifting towards gradual changes, sensible pricing, and eager negotiation, especially with higher borrowing costs in mind. This period presents good opportunities for both buying and selling ahead of potential political uncertainty due to upcoming elections.
National Overview
We’re including comments from various agents in the country in this month’s Property Sentiment Index (see page 8), which confirms increased real estate activity in April, with buyers and sellers staying optimistic and regional demand and availability influencing prices.
Alan Cumming of Aberdein Considine in Scotland sees a rise in both property listings and viewings. Prices seem to be climbing in some regions, as noted by Stuart Matthews of Miller Metcalfe in the North West, who suggests sellers need to strategize pricing carefully due to potential election-induced uncertainty. Meanwhile, Angi Cooney at C Residential in the West Midlands reports a steady price growth and a seller’s market scenario in Staffordshire, with bid wars increasingly common.
In Wales, Melfyn Williams of Anglesey & Gwynedd describes a robust market with properties selling well at auction, often for far more than the guide price. On the other hand, John Nicholson of Dowen Auction, Sales and Lettings in the North East points to concerns over interest rate cuts, which has some buyers holding off. Nevertheless, a persistent property shortage and steady demand maintain competitiveness in the market. Lastly, Neill Millward of Robert Ellis in the East Midlands is positive about the upcoming summer market, expecting both opportunities and challenges as competition might affect pricing and negotiation tactics.
The full report is available to read on OnTheMarket’s website.