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House buyers ‘hedging their bets’ as demand slips in May

House buyers ‘hedging their bets’ as demand slips in May
Shekina Tuahene
Written By:
Shekina Tuahene
Posted:
03/07/2024
Updated:
03/07/2024

Some prospective house buyers are waiting for the outcome of the general election and a change to the base rate before going ahead with plans, the head of an estate agency association said.

Reacting to the 16% fall in potential buyers registering with estate agents in May, which fell from an average of 88 in April to 74, Nathan Emerson, CEO of Propertymark, said some people were “hedging their bets”.

According to Propertymark’s Housing Insight Report for May, there was also a marginal fall in the average number of viewings per property.

The amount of new property supply declined too, with around 11 homes placed for sale per branch in May, down from 12 previously.

There was also a contraction in the volume of market appraisals undertaken during the month, with a 6% decline from 26 to 24 in May.

Despite this, there was a rise in available housing stock, which went up from an average of 40 properties per branch to around 42.

House buyers holding out

Emerson said: “After a flurry of activity last month, there has been a shift in key metrics, including a reduction in prospective buyer registrations and viewing numbers. However, this is in line with expectations/established seasonal trends, with consumer attention beginning to shift from housing to holidays.

“On a positive note, the number of sales agreed increased marginally, suggesting that the market remains dynamic. The good news for buyers is that the gap between asking prices and market expectations continues to narrow and stock levels continue to increase.

“With pricing and availability improving, now is a great time to enact moving plans.”

Emerson added: “Despite this, some buyers are hedging their bets, awaiting the outcome of the general election and movements in the base rate. However, elongating exchange times suggest that buyers should not delay if they want to move in 2024.”

Exchange times remain lengthy

The Propertymark report found the average number of sales across each estate agent branch rose from nine in April to around 10 in May.

The gap between asking prices and market expectations narrowed, but they were still misaligned.

In May, more than 70% of properties sold for less than their asking price.

The time to exchange continued to fluctuate, Propertymark said, but was still “historically high”, with the majority of transactions taking more than 13 weeks to complete.

Tenant demand rises

On the lettings market side, the average number of new prospective tenants registering with each estate agency branch rose from 90 in April to 97 in May.

Stock levels also increased from around 10 rental properties to 11 and remained within long-running parameters.

Tenant demand continued to outstrip supply, with roughly nine applicants registering for each available property. This was flat month-to-month, but below last year’s figure of 13 tenants.

There was also an increase in the average number of new tenancies agreed.

The proportion of Propertymark’s members reporting no growth in rental prices remained flat at 47%, as did the 34% share of members noting a rise in rental prices.

However, the share of members saying rental prices had dropped increased from 12% in April to 18% in May.

Emerson said: “In the residential lettings sector, tenant demand continues to increase. While stock levels have improved, there were around nine applicants registered for each available property in May. Although most members report that rents continue to rise or have remained static, there is some good news for prospective tenants, with an increase in the number of members reporting rents falling (18% in May 2024 versus 12% in April 2024).

“While both sectors remain resilient, there is much that the next government can do to support buyers [and] renters, such as improving the home buying/renting process and professionalisation of the sector via the regulation of agents. More broadly, there is a need for a review of property taxes to make changes [that] stimulate supply and demand.”