The normal sales market dynamic has been grossly distorted by a late autumn budget and the Bank of England's pending decision on interest rates, according to Home.co.uk's House Price Index for December.
Many potential vendors sat on their hands rather than enter the market, preferring to wait until the dust settles. The result of this uncertainty before the announcement on 26th October was that 29% fewer properties than expected entered the market in November.
The dramatic reduction in supply has caused a steep fall in the number of properties on the market. This will support home prices in the near term, which have been under heavy pressure recently due to a glut of unsold stock.
Seasonal expectations suggest agents' portfolios will shrink further before swelling with a surge in new listings during January.
Buyer demand in the new year will depend partly on the next Bank of England interest rate decision on 18th December. Markets have priced in a cut of 0.25%, and this move to lower borrowing costs would be a welcome early Christmas present for UK property sales. However, should the Bank of England be hawkish about inflation risks and hold the base rate at 4%, this would create significant negative sentiment among hopeful buyers.
Home prices continue to slide as per seasonal expectations. Prices fell in all English regions during the last month, except the South West, where there was no change, and in Scotland. Only Wales recorded a small rise during November.
Vendor numbers crashed during November
Following the October surge, which showed the highest number of new instructions for that month in many years, supply has slumped to the lowest November figure since post-crisis 2010. The 29% drop compared to November 2023 indicates the level of vendor hesitancy brought about by the controversial budget from Rachel Reeves and the forthcoming Bank of England decision on interest rates. The largest falls occurred in the South West, North West and Greater London.
Home prices continue their seasonal slide
The mix-adjusted average asking price for England and Wales dropped 0.5% during November, making the annualised growth figure just 1.0%, woefully outpaced by monetary inflation. Yorkshire indicated the largest month-on-month decline.
Stock levels reducing rapidly
The notable glut of unsold stock on the market that formed over the summer months is now reducing rapidly. Thanks partly to vendor hesitancy, the total portfolio count for England and Wales is now just 1.2% more than in December 2023. Total stock dropped by 40,000 during November and this large reduction will help support prices while it lasts.
Regional performance varies
The North West is the top regional property market growth leader with a year-on-year gain of 2.6%, followed by the West Midlands. Meanwhile, London remains the worst regional performer with an annualised decline of 0.7%.
Typical time on market for unsold properties continues to trend higher and is currently seven days more than in December last year.
Rental market declining
The annualised national growth in asking rents trends further into the negative, now at -3.8%. Scotland, Wales and all English regions apart from the North West, which shows no change, indicate year-on-year declines in the mix-adjusted average asking rent. The worst performer is the East Midlands with an annualised decline of 13.4%.
Twenty of the 33 London boroughs indicate positive asking rent growth, up from 17 last month. Kensington and Chelsea is the slowest market with a typical time on market of 39 days, while Barking and Dagenham is the fastest lettings borough at 15 days.
