A surge of larger homes has recently hit the UK housing market, heralded by falling mortgage rates and rising concerns about potential capital gains tax (CGT) increases, according to new data from Rightmove. Annabel Dixon delves deep to understand the underlying trends.
With the summer holidays behind us, the housing market is springing back to life, particularly for buyers with significant financial resources. Last week saw ‘a wave’ of larger properties come on the market, which has contributed to optimism among sellers eager to capitalize on favorable lending conditions.
Rightmove reports a 15% increase in high-end home listings compared to the same period last year. This marks a notable shift away from the previous trend where more modest two-bedroom properties dominated the market. The rise is most pronounced in the East of England, where listings for homes with four or more bedrooms have surged by 21%. The South West is hot on its heels, with 20% more top-tier properties compared to just one year ago.
Tim Bannister, the property expert at Rightmove, noted, “Some of the lowest mortgage rates since before the mini-Budget are now available for those with larger deposits, and speculation about Capital Gains Tax changes seems to be influencing sellers' decisions.”
Yet, opinions on this uptick are mixed. Jonathan Harington, director at Haringtons UK, expressed surprise at the reports of increased activity among the larger homes sector but acknowledged the reality of unsold properties at the upper end. “There won’t be any rush until buyers see what’s revealed in the Autumn Budget,” he stated.
House prices, meanwhile, might be poised for recovery. The Royal Institution of Chartered Surveyors (RICS) has released findings indicating improving buyer interest and increasing sales activity last month. House prices, which had been on the decline for almost two years, saw signs of upward movement.
RICS Chief Economist Simon Rubinsohn commented, “The latest RICS survey captures an improvement in sentiment over the past month due to the modest decline in mortgage rates. Buyer interest is improving, albeit from a low base, and stock levels appear to be edging up.” He cautioned, though, about the necessity for realistic pricing to finalize sales, considering uncertainties around potential interest rate cuts and the upcoming Budget.
Meanwhile, the government is making strides to boost housebuilding and tackle NIMBY (Not-In-My-Backyard) attitudes. The recent initiative by Labour, aimed at increasing housing development, shows ambitions to mitigate resistance against new projects. This strategy identifies the North East of England as having the highest approval rate for housing applications at 81%, with London not far behind, achieving 100% on just six applications. Contrast this with the East, where only 64% of applications receive the green light, signifying regional disparities.
But the market dynamics aren’t static. Observers are focusing on the looming judgment from the government’s planned Autumn Statement, particularly concerning the capital gains tax. Such tax worries might be driving many second-home owners and landlords to make preemptive moves to sell larger properties. Rightmove’s weekly mortgage tracker shows the average rate on five-year fixed deals has plunged to around 3.97% for those with substantial equity, which enhances buying power at the luxury end.
The increased availability of larger homes on the market seems to prompt others to list their properties, leading to more options for potential buyers. According to the latest statistics, sellers appear to be responding to this newfound demand at the top-end of the market, creating more liquidity for transactions.
But beyond immediate selling patterns, experts are advocating for stability and realistic pricing to sustain interest. With myriad factors influencing buyer decisions—from economic conditions to market sentiment—there is a cautious optimism surrounding future listings.
For those entering the market, moving day is worth noting. Traditionally, Friday has been the most popular day of the week for moving. Interestingly, Rightmove data reveals Friday the 13th is surprisingly quiet for sales completions, potentially offering buyers advantages, as logistics may be simpler on such days.
To capitalize on these conditions, prospective home buyers should be mindful not just of market trends but also the personal factors influencing their decisions. The return of larger homes combined with access to competitive financing options evokes both opportunity and excitement, as buyers make their choices against the backdrop of potential policy shifts.
With shifting dynamics shaping the housing market narrative, there’s no denying the urgency for clear strategies among both buyers and sellers. The upcoming weeks may yield significant insights as the season progresses, and all eyes will be on the data for subsequent trends.
While the question of whether the housing market is genuinely recovering remains complex and nuanced, one aspect is clear: larger properties are now more visible on the market, veering the focus back to the luxury segment. The key players are keeping watch busy, weighing mortgage rates against the risk of government policy adjustments behind the scenes.
