Residential Property Market Shows Resilience
Despite a range of external factors that have acted as a cloud over the economy the residential property market has held up very well indeed.
There are a variety of factors at play here including the recent fall in average 5 year mortgage interest rates below 5% for the first time since September 2022.
As recently reported by the BBC the view is that the recent mortgage rate drop ‘may only equate to a small financial saving, (but) it may signal a shift in market sentiment, with Moneyfacts describing such moments as a symbolic turning point.’
Overall interest rates are looking stubborn with the recent figure being 3.8%, somewhat above the Bank of England target. As such the outlook for further interest cuts is looking less likely. This could well mean that many are now pushing on with property purchase plans and not waiting for borrowing costs to fall further.
The ‘Nationwide House Price Review and Outlook for 2025’ reported that 2024 had shown a degree of resilience in the market and forecast an increase in house prices for 2025 in the range of 2-4%.
Robert Gardner, Nationwide’s Chief Economist, commented that:
“Providing the economy continues to recover steadily, as we expect, the underlying pace of housing market activity is likely to continue to strengthen gradually as affordability constraints ease through a combination of modestly lower interest rates and earnings outpacing house price growth, where the latter is likely to remain broadly in the 2-4% range in 2025.”
The Government has also publicly come out in support of a major push for new home building.
Angela Rayner announced that an overhaul of the planning system will take place and that all councils in England are to be given new, mandatory housing targets, ‘to pave the way to deliver 1.5 million more homes – tackling the most acute housing crisis in living memory. ‘
Whether this target will be achieved or not is open for debate – but the direction of travel is clear and it will most likely add further impetus to the housing market.
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