Your Watford & Hertfordshire market report

January's housing data is always eagerly anticipated as it gives the first clues to the direction of travel for the housing market for the year ahead. This time, even more so, as the market had been waiting to see how buyers and sellers would react to the reductions in mortgage rates at the back end of 2023. The market had already been showing signs of recovery, with Halifax's monthly figures surprising many commentators by moving into positive territory from October.

January’s figures show that the process is accelerating as nearly two years of pent-up demand is released onto the housing market. Activity has risen across the board. According to Zoopla, buyer demand was up 12% in January compared to the same period in 2022. Sales agreed were also up (+13%), but in some areas, such as Yorkshire and the Humber, they went even higher at +19%. The number of properties coming to the market has been on the rise, too, with a 22% increase in supplies in January.

Rightmove is also seeing increasing activity levels. Asking prices were up 1.3% in January, and even more significantly, the Mortgage in Principle section on their website has seen record traffic post-Christmas.

Paul Gillespie, Managing Director at Rolstons, says:

”The numbers suggest that many are taking action to make their move in 2024, perhaps including some who paused last year due to the more unsteady mortgage market.”

However, it’s not all good news. Mortgage rates may have come down, but at 4.86% for the average 5-year fixed rate, they are still high compared to the last decade and are unlikely to come down much further this year. It means affordability remains stretched, and buyers are seeking discounts.

Zoopla reports that a fifth of sellers have to accept offers more than 10% below their asking prices. They advise that ‘sellers must continue to price realistically if they are serious about moving in 2024. Improved market conditions will boost the chances of a sale, but sellers shouldn't expect to list at a higher asking price.’

Rental & Buy To Let Market

As has been the case for some time now, the rental market is on the opposite path to sales. With affordability now stretched to its limit, rents came down again last month. Homelet’s data shows the average is now £1,260pcm, a fall of 0.6%, although, on an annual basis, rents remain in positive territory at 7.5%. Unsurprisingly, some of the most significant falls have occurred in London (-2.2%), where rents have soared the highest. Just two years ago, the average rent in the capital was well under £2,000 at £1,760pcm. It is now £2,081pcm, which means a typical London tenant spends over 40% of their income on rent.

Falling mortgage costs have meant that the gap between renting and buying is closing, but it is still considerable. Someone with a 10% deposit will pay around 25% more to buy than rent, without factoring in having to save for a deposit beforehand. Unless mortgage costs fall substantially, there is unlikely to be any reduction in demand for the rental sector.

There are, though, some developments on the legislation front. With an election looming and the Tories trailing Labour, especially with younger voters, Michael Gove is now turning up the pro-tenant rhetoric and is promising to speed up progress on the Renters Reform Bill and No-Fault Evictions. The concern is that he will push through the legislation without providing the required changes in the legal system that are needed to make it work for landlords.

If you'd like to talk to an agent for more personalised advice, our team are always on hand to help. We'd love to hear from you, whether just a quick chat or a no-obligation property valuation.

Warm wishes,

The team at Rolstons.