UK & London sales market update Spring/Summer 2024

Brick houses with a view of London skyline

Price declines are reversing and activity up from Q4 2023, but pricing still remains key for new listings.

Highlights

  • Average UK house prices record modest annual growth in Q1 2024
  • Prime London prices largely flat on the year
  • Transaction levels picking up from low at end of last year

Prime London sales market

Expectations for rate cuts this year meant mortgage rates dipped in early Q1, supporting more activity in the market. As examined in more detail in the economic update (link), changing expectations around the number of base rate cuts expected this year (three instead of five) meant mortgage rates bounced back up a little in March, which has had a modest knock-on effect on activity in the market.

However, the overall pick-up in the market compared to Q4 2023, has been reflected in pricing, with prime London property values down just -0.6% compared to March 2023. This compares to a -2.1% annual fall in prices registered in September 2023.  

Graph of annual change to prime London sales values Cluttons residential market update Summer 2024

However, despite the small recovery in pricing, asking price remains key for vendors looking to complete a sale in a timely manner in the current market. As can be seen from the chart below, average values are still below the recent peak of the market in mid-2022, and the base rate, and mortgage rates, have more than doubled since then.

The likelihood of a first base rate cut in June seems to be in question given the geopolitical landscape and slightly higher-than-expected inflation data for March. But there is more data to come before the June rate meeting, and the Bank of England Governor recently pointed to ‘strong signs’ that inflation was falling, a change in tone compared to the last few years.  Any rate cut will act as a spur to re-pricing among mortgage lenders, and will be another boost to buyers looking to lock into less expensive mortgage deals. It will also come as inflation is falling back and wages rise, expanding household incomes.

The actual act of cutting the base rate, after 14 consecutive rate rises will likely prompt more activity than would be expected to emerge from a simple 0.25% cut in rates at any other time. It will be confirmation that the Bank is now looking to loosen monetary policy, and there will be expectations that this will continue throughout the rest of this year and into next year, which will in turn boost sentiment, and release demand in the prime London market.

Graph of annual change by area an property type in prime London sales values. Cluttons residential market update Summer 2024

UK sales market

Average UK house prices fell by 0.2% during March, after rising by 0.7% in January and February, according to Nationwide data. Despite this monthly dip, house prices were still up 1.6% on the year in March, compared to the -5.3% decline registered in September last year.

The monthly price data signals that the slight rise in mortgage rates during February and March may be having an impact on the market, although this will reverse as we get closer to an anticipated rate cut in June.

Graph of annual change in UK house prices. Cluttons residential market update Summer 2024

Sales activity is rising from the lower levels recorded, especially in Q4 last year, with UK mortgage approvals early this year rising to the highest levels since late 2022, although levels remain lower than pre-pandemic averages. Total residential sales numbers were nearly 20% lower last year than in 2022, and well below the long-term average. Activity will pick up this year once mortgage rates start to fall.

Chart of UK residential transactions. Cluttons residential market update Summer 2024

As ever, not all parts of the country are moving at the same speed when it comes to price changes. While Scotland and the North West are recording annual price growth of more than 3.5%, prices are still falling on an annual basis in much of Southern England. The exception is Greater London, where prices are up 1.6%. London experienced a more muted rise in prices during the pandemic, and a smaller reversal last year, giving it a platform for a stronger price recovery in current market conditions.

Map showing annual change to UK sales prices. Cluttons residential market update Summer 2024

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Gráinne Gilmore

Director of research and insights

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T +44 (0) 20 7647 7142
Gráinne Gilmore, director of research & insights, Cluttons
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Einar Roberts

Partner, residential consultancy

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Einar Roberts
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James Hyman

Partner, head of residential agency

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T +44 (0) 20 7407 3669
James Hyman, head of residential agency, Cluttons
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Neil Duffy

Partner, residential valuations

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T +44 (0) 20 7647 7265
Neil Duffy