Wellingborough Property Market Update – December 2023

Christmas is nearly upon us and we have almost a full calendar year of Wellingborough property data to look back on. I’ll likely do a summary on what’s happened over the course of 2023 in January, but for now let’s see where we stand.

The average asking price of properties for sale in November was £271,826. This is £2,001 (0.7%) lower than November 2022, but £20,807 (8.3%) higher than November 2021, so some of the media narrative of a ‘property crash’ haven’t quite come to fruition.As we can see, asking prices are beginning to level out at around the £275,000 mark, however the asking price of sold properties seem to be bouncing around but showing an overall downward trend.

Also, the difference between asking prices of properties on the market and sold properties now stands at £46,264 (20.5%). This is quite a significant gap, which needs to close by further reductions on asking prices or greater buying power (more on that later).

We also see a small reduction in the number of properties for sale, falling by 7.6% from 693 in September to 640 in November. This is most likely due to Christmas approaching and people deciding to wait until they have a little more certainty in what the property market will do in the coming months.

The percentage of properties that have been sold is down too. In January this year, 12.4% of 636 properties for sale had been listed as sold. In November, this had nearly halved to 6.3% of 640 properties.

For November 2021 and 2022, 12.5% and 8.7% of  609 and 663 (respectively) properties had been sold, so the slower Christmas period doesn’t seem to be an explanation.

My Thoughts

If the UK economy as a whole is like a tanker ship, the property market is the back end and reacts the slowest. but we do have some leading indicators that hint at what may be around the corner for us.

Firstly, the banks. They have all the data and information to make decisions around lending and whether they’d like to expand or contract how much they invest.

Recent Bank of England (BoE) data shows that UK mortgage approvals were up more than anticipated in October, which suggests that a brighter year is ahead of us. The data revealed that net mortgage approvals rose to 47,400 in October, beating the projected figure of 45,000 by over 5 per cent.

On interest rates, Morgan Stanley, the investment bank, says the Bank of England is planning to lower interest rates starting in May, which is good news for people with mortgages. In a message to clients, the big Wall Street player foresees policymakers bringing rates down to 4.25% by the end of the next year as food and core goods prices ease.

This prediction of a May cut comes a week after Huw Pill, the Bank of England’s chief economist, mentioned that it wouldn’t be “unreasonable” for investors to expect a rate cut next summer.

Whilst I think there is likely to be price falls thrroughout 2024, I don’t expect there to be a ‘crash’ as such. More of a levelling out to a more affordable figure where the new interest rates and mortgages meet buyer affordability.

If, however, asking prices were to fall by 5%, they would be £258,235 (approximately the same as they were in January last year)

If they were to fall 10%, they would be £244,643 (equivalent to October 2021 prices)

Lettings

The average asking rent in Wellingborough fell by 2.1% from £902 in October to £883 in November. This is only a month-to-month drop with an ongoing increasing trend that is likely to continue.

The current asking rent has increased by £72 (8.9%) compared to the same month last year and £180 (26.5%) from when I started collating the data in January 2021.

Zoopla expects to see a slowdown in rental growth over 2024 but it said this will be kept in check by an ongoing scarcity of supply due to low levels of new investment in the face of more regulation and higher mortgage rates. The website expects annual UK rental growth to halve to 5% by December 2024.

Richard Donnell, executive director at Zoopla said: “The UK is past peak rental growth which will be welcome news to renters who have seen rents rise by almost a third (31%) over the last three years. London will lead the slowdown, acting as a drag on the UK growth rate.

“The rental market has been stuck in a period of static supply and strong demand which has pushed rents higher.

“Demand has been driven by the strength of the labour market, the reopening of the economy after the pandemic lockdowns, record immigration and higher mortgage rates, making it harder for would-be first-time buyers to buy a home.

“Faster growth in earnings has supported a faster pace of rental growth. The supply-demand imbalance in rented housing is not going to disappear in 2024, however, the market is set to become more balanced than it has been over the last three years.

“The slowdown in rental growth over 2024 will be down to a weaker labour market, slower earnings growth and growing affordability pressures limiting the pace at which rents can rise, particularly in southern England.

“Rents have room to rise above the UK average in regional cities where affordability is less of a constraint, but this won’t be the case indefinitely.”

*All data sourced from Zoopla Pro