Housing market past ‘peak pain’

It’s been a rollercoaster of a year in the housing market, with rising interest rates and the increase in the cost of living making for a turbulent time.

But the market in Shropshire and Staffordshire is still holding strong and there are still plenty of opportunities to sell for those who are realistic.

Values appear to have held up better than expected in 2023 as mortgage markets settled over spring and autumn. According to Savills research, annual falls will stand at four per cent by the end of the year, which will leave values down a total of seven per cent since the autumn of 2022.

Cash buyers have been the most active this year, with activity 3.5 per cent higher than the 2017-19 average. However, less activity among mortgaged buyers – most notably buy-to-let investors – means overall transactions are expected to be 20 per cent down on 2022.

Savills is predicting the average UK house price to drop by a modest three per cent in 2024 as affordability pressures start to ease, with the expectation that the base rate will stand at 4.75 per cent by the end of the year.

Here in the West Midlands we expect prices to perform better than the national expectations, falling slightly by two per cent in 2024. This reflects the ongoing economic uncertainty and elevated interest rates. But even with that fall, house prices across the region will remain 19 per cent higher on average compared to the beginning of 2020 before the pandemic.

Looking ahead, the strength and depth of Birmingham’s economy, excellent schooling, planned infrastructure improvements and UK-wide connectivity means that there is more capacity for growth. Consequently, we expect the West Midlands to outperform the rest of the UK over the next five years, led by the equity driven prime markets of Shropshire and Staffordshire.

With the Bank of England expected to start cutting interest rates in the second half of 2024, this should give more capacity for growth from the end of next year – with our research forecasting prices in the West Midlands to grow by an average 19.6 per cent over the next five years.

We are expecting sales numbers across the UK to remain at around 1 million in 2024, rising to 1.16 million by the end of 2028 – slightly below a pre-pandemic norm of 1.2 million.

Here in Shropshire, in the period between January and October of this year, the postcodes of Much Wenlock, Newport, Shrewsbury and their surrounding areas saw a 15.5 per cent increase in second hand homes priced above £500,000 being brought to the market, compared to the same period in 2022, according to data provider TwentyCi, demonstrating that market sentiment remains positive.

So what does this all mean for those who are looking to move this year?

Well, while the housing market appears to be past ‘peak pain’, putting your property on the market at the right price is paramount to a successful sale. Demand remains good for high quality property, especially from the downsizer market and cash rich purchaser.

Those seeking a mortgage should start to see more competitive mortgage rates once interest rates start to reduce, and this year is a good time to look at your purchase options.