Introduction: 

The property market is always a topic of interest, with people constantly speculating about its direction and the impact of various factors such as mortgage rates. In this blog post, we will delve into the current state of the property market, focusing on both the sales and rental markets. We will explore the key statistics and trends, providing insights into the opportunities and challenges faced by buyers, landlords, and tenants. So let's dive in!

Sales Market Overview: 

Contrary to some suggestions, the sales market is not as dire as it may seem. According to data from Rightmove, there has been a monthly price increase of 1.8% for new properties entering the market, indicating a slight upward trend in prices. The annual price growth stands at 1.5%, demonstrating steady growth. Additionally, there has been a 3% increase in demand compared to the pre-COVID period, indicating a healthy level of interest from buyers.

Demand and Negotiation:

Demand from first-time buyers and homeowner occupants remains strong, with some properties still receiving offers at or above asking prices. The negotiation process has returned to normal levels, with the difference between the asking price and the sale agreed price at approximately 3%. This contrasts with the heightened competition of the previous year when offers often exceeded the asking price. Properties are also spending a relatively short time on the market, typically around four to five weeks.

Increase in Supply: 

One positive sign for the sales market is the increase in the supply of new properties. Many sellers are becoming more confident in the market, leading to more properties being listed. However, despite the rise in supply, the demand is still around 15% lower than the average between 2018 and 2022. This can be attributed to higher mortgage rates and the overall cost of living, which may deter some potential buyers.

Rental Market Opportunities: 

The rental market presents several opportunities for landlords and property investors. The market remains highly active, with no shortage of potential tenants and rising rental values. Due to high-interest rates, fewer tenants can afford to buy, leading to increased demand for rental properties. This creates a favourable environment for property investment, especially for buy-to-let properties. Using pensions to hold commercial buy-to-let properties can also provide tax benefits.

Strengths, Weaknesses, and Threats: 

While the rental market offers opportunities, there are also challenges to consider. Taxation remains a significant challenge for landlords who hold properties in their names. Mortgage rates for new deals and variable rates are still relatively high, which may limit borrowing capacity. Short-term lending options often have higher stress rates, resulting in higher deposit requirements. It is important to assess these factors when considering property investment or renting out a property. Using pensions to hold commercial buy-to-let properties can also provide tax benefits.

Conclusion: 

The current state of the property market shows promising trends in both the sales and rental sectors. While there are challenges such as higher mortgage rates and taxation, opportunities exist for buyers, landlords, and investors. The market is characterized by steady price growth, strong demand from buyers and tenants, and an increase in the supply of properties. By staying informed about market trends and considering the specific opportunities and challenges, individuals can make informed decisions in the property market.