Tom Killen, who established Killens and has over 30 years of experience in the local property market, looks at the current trends in the market.
We are seeing the property market continue its recovery during 2024 with buyer demand, transaction levels and prices rising.
In England, house prices grew by 2.2% in the year to May, stronger than any time since March 2023 [Land Registry]. Detached and semi detached homes led the way with 3.8% growth year-on-year. A lack of available larger homes during the pandemic years, combined with sharp mortgage rate rises following the infamous mini budget meant that many movers in these sectors delayed moving. Buyers are now returning driving stronger growth in these sectors. Growth was more muted but still positive for lower priced homes with terraced houses rising by 1.9%.
In Somerset, the average house price now stands at £290, 816 having risen by 25.9% since 2019. In Bath & North East Somerset, the average value is £428,154 with values having climbed by 27% over the same period. North Somerset has seen similar growth with the average value now being £327,939.
Across the West Country, transaction levels have continued to recover, having climbed to their highest point since March 2023 and up 9.8% year on year [HMRC]. This indicates a reviving property market as improving economic conditions help ease household financial pressures. Despite mortgage rates remaining elevated for longer than anticipated, pent up demand alongside the usual seasonal boost has driven increased buyer and seller activity. It also seems that the South West has been somewhat insulated from the effects of higher mortgage rates due to its appeal to higher-income households and retirees who are less sensitive to interest rate changes.
As a consequence, we are seeing a sustained uplift in sales, with Zoopla reporting that the region has seen 13% more sales than last year, agents rebuilding sales pipelines and the market being on track for close to 1.1 million sales in 2024, a 10% increase on last year.
While there has been an increase in new housing developments, particularly in urban centres, the pace of construction has struggled to keep up with demand. Planning restrictions and the availability of suitable land have further exacerbated supply issues, contributing to sustained price pressures in high-demand areas. There are however a fifth more homes available than the same time last year, the highest level of supply in eight years [Zoopla] as sellers finally decide to make a move. The average agent outside of London offers twice as many 4+ bedroom homes compared to 2022 whilst there are 25% more three-bed homes available compared to a year ago, promising news for families looking to upsize. Increased supply is giving potential buyers more choice, however affordability is a key factor affecting budgets.
Asking prices for homes have edged up. The average asking price of a property in the South West has climbed by 0.3% year-on-year but the market remains very price sensitive with 62% of offers currently being accepted at up to 5% below asking price, with a further 20% slipping to more than 5% below [Dataloft]. Properties which are marketed at too high a price can struggle to generate any interest at all.
There has been a noticeable shift in the demographics of homebuyers in the South West. Younger families and remote workers have increasingly moved to the region, attracted by the quality of life and relatively affordable housing compared to London and the South East. This influx has contributed to the stronger demand with diverse property demands, from family homes to modern apartments.
Looking ahead, the South West housing market is expected to continue its trend of moderate growth, with regional disparities likely to persist. The following factors will be pivotal in shaping the future landscape:
1. Economic Recovery: The trajectory of economic recovery post-COVID-19 and post-Brexit will significantly impact the housing market. A stable economic environment will bolster buyer confidence and support market activity.
2. Infrastructure Improvements: Investments in infrastructure, such as transport links and digital connectivity, will enhance the region's attractiveness. Improved accessibility could lead to increased demand and further price appreciation in currently less accessible areas.
3. Environmental Considerations: Sustainability and environmental considerations are becoming increasingly important for buyers. Homes with energy-efficient features and those located in areas less prone to climate-related risks will likely see higher demand.
4. Policy Changes: Future government policies, particularly those related to housing and taxation, will also play a crucial role. Policies aimed at increasing housing supply and improving affordability will be essential in addressing market imbalances.
Over the past year, the South West UK housing market has demonstrated resilience and adaptability characterized by stable prices and shifting buyer demographics. Influenced by economic conditions, supply constraints, and government policies, the market is poised for moderate growth and the South West remains an attractive destination for homebuyers seeking a high quality of life amidst picturesque settings.
If you are considering moving in 2024 and would like details of the full range of residential services Killens can offer, please contact our Wells Office at 01749 671172 or our Chew Magna office at 01275 333993.