2024-05-15-莱坊-UK_Residential_Market_Update_Q2_2024_2页_223kb

UK Residential Market Update Summary - Q2 2024

Core Content Overview

This summary outlines the current state and trends of the UK residential market as of Q2 2024, focusing on house price growth, transaction activity, and regional performance in London and the countryside.

Key Trends in the UK Housing Market

House Price Growth

• Annual growth has slowed, with the market showing a sideways trend.
• Monthly growth reported by Nationwide and Halifax reversed in March.
  • Nationwide: 1.6% annual growth in March.
  • Halifax: 0.3% annual growth in March.
• Rate cut expectations have faded due to strong services inflation data, leading to buyer hesitation.
• The first rate cut since March 2020 appears to be moving further into the future.

Transaction Activity

• Transactions are expected to see a seasonal spring bounce due to rising supply.
• Mortgage approvals reached a 17-month high in February, only 9% below the five-year average.
• Transaction numbers remain around a fifth below the five-year average, but are anticipated to improve as the year progresses.

Prime London Sales

Market Dynamics

• Mortgage costs have fluctuated due to mixed signals on inflation.
• Buyer urgency has decreased, influenced by rising supply and uncertainty around tax rules for non-domiciled individuals.
• Sales instructions in London were 17% above the five-year average in Q1 2024.

Price Movements

• Average prices in Prime Central London (PCL) fell 2.4% year-on-year to March 2024.
• Prime Outer London (POL) prices dropped 1.5% year-on-year, after a slight rise of 0.1% in February.
• Lower-value markets have seen more activity, driven by domestic buyers seeking homes for education or employment.
• Discretionary, higher-value markets have experienced more hesitancy.

Prime London Lettings

Rent Trends

• Lettings supply has increased while demand remains steady, leading to downward pressure on rents.
• Average rents in PCL rose 5.6% year-on-year to March 2024, compared to 16.9% in March 2023.
• Rents in POL increased 5.1% year-on-year, down from 15.2% a year earlier.
• Rents are still 34% higher in PCL and 30% higher in POL than pre-pandemic levels.

Supply Changes

• Supply shortages have been exacerbated by red tape and taxes, leading to a 14-month stamp duty holiday from July 2020.
• New lettings listings in PCL and POL were 13% below the five-year average in Q1 2024.
• However, lettings in the upper price brackets (above £1,000 per week) saw a 40% increase in listings.

Country Market

Price Trends

• Country home price growth turned positive on a quarterly basis for the first time in almost two years.
• Quarterly growth was 0.3% in Q1 2024.
• Annual price growth remains negative, at -5%, but has improved from -6.1% in September 2023.
• Prices are still 11.8% higher than at the start of the pandemic in March 2020.

Price Bracket Analysis

• Lower price brackets continue to experience the biggest annual price declines.
  • Homes priced between £1 million and £2 million: -5.7% year-on-year.
• Homes priced above £5 million saw a -2.4% decline year-on-year.

Data Sources and Contact Information

• Data sources: Knight Frank Research.
• Sign up for more analysis: knightfrank.com/research
• Contact:
  • Tom Bill, Head of UK Residential Research:
    +44 20 7861 1492
    tom.bill@knightfrank.com
  • Kate Everett-Allen, Head of International and Country Research:
    +44 20 7167 2497
    kate.everett-allen@knightfrank.com