Market report June 2024 – election season jitters?

Rental growth has dipped to its lowest level since 2021, while the sales side of the market still looks flat. However, some industry figures point to silver linings.

• Is uncertainty around next month’s general election reducing housing market activity? The industry is divided. The latest survey by the Royal Institute of Chartered Surveyors (RICS) revealed a dip in market confidence in the run-up to the vote, with buyer demand falling. However, market data provider TwentyEA says both instructions and sales have grown year on year.
• Either way, industry reports show a mixed picture for house prices. Nationwide found a seasonally adjusted monthly change of 0.4% and year-on-year growth of 1.3%, taking the average home to £264,249. But Halifax’s numbers are less positive: house prices shrank by 0.1% month to month, although they’re still up 1.5% year on year for an average of £288,688.
• Rents are still rising faster than house prices, but the 6.6% year-on-year growth in Zoopla’s latest Rental Market Report is the slowest since 2021. The average new let was £1,226 in April. According to Zoopla’s research director Richard Donnell, tenant demand is still high, but rents are hitting affordability limits.
• Housing industry figures are mostly optimistic, but some – like Tom Bill, Knight Frank’s head of UK residential research – warn that high interest rates are still holding back the market. Economists now expect the Bank of England to make its first rate cut in August.
• Agents on the ground also report a rise in activity, according to Propertymark’s latest Housing Insight Report. On the sales side, they completed 14% more market appraisals and registered 16% more buyers in April than in March. Rental stock levels also rose, although they were outpaced by a rise in tenant demand – and the number of new tenancies signed actually fell by 1%.
• If uncertainty in the market is down to the election, we could see the market pick up in the second half of the year. Polling day is just two weeks away, and now that all the major parties have released their manifestos we have a good idea of their plans for the sector. Inflation has fallen back to its 2% target for the first time in three years, raising the prospect of interest cuts later in the year, and so July to December could look very different to January to June.