Our client survey in March showed a pick-up in buyers’ commitment to move, as well as the first sign of an increase in buyers’ budgets in the prime market, likely helped by the headline rate of inflation falling to 3.4% in February and the prospect of interest cuts more firmly coming into the eyeline.

This was also reflected in our latest prime house price indices, which showed a bottoming out in the prime central London and prime regional housing markets, and a return to quarterly price growth in the other more domestic prime London markets.

Rental growth moderates

In the prime rentals market, where we are increasingly seeing a gap between landlord and tenant expectations, annual rental growth continued to moderate across the market. Rents rose by an average of 0.3% in the first three months of this year in the top end of the capital’s rental market, leaving rents for prime property 3.2% above where they were a year ago. Outside of London, rents rose by a little more (+0.9% in the quarter), meaning annual rental growth stood at 4.0% at the end of March.

From a regulatory perspective, the big news in the rental market is that the Renters Reform Bill is now expected to return for its third reading in the House of Commons in coming weeks, albeit with some concessions that should serve to protect landlords’ positions upon abolition of the Assured Shorthold Tenancy in England.

Meanwhile, in the mainstream market

Encouragingly, mortgage approvals for house purchases continued to pick up in February, rising above 60,000 for the first time since September 2022. However, they remain below their pre-pandemic norm of around 66,000. In a market where cash and equity-rich buyers still have a competitive buying advantage, Nationwide’s small monthly fall in mainstream house prices in March is a reminder that, despite a stabilisation in mortgage rates, affordability pressures remain for mortgaged buyers.

And in a further sign that the market still remains relatively price sensitive, the number of properties seeing an adjustment in their asking prices was still 42% above a normal pre-pandemic market, according to data from TwentyCI.

That same data tells us that, where property is priced according to market conditions, it continues to sell. Even accounting for an early Easter, sales activity in March was 4% higher than in March 2023 and 2% above a normal pre-pandemic market. And, chiming with our own prime indices, London activity levels were slightly stronger, being 9% and 6% higher respectively, reflecting a focus back towards city living.

Listen on the BBC You and Yours show

If you’re interested in downsizing, you can listen to me discuss the challenges of doing so in Monday’s episode of You and Yours on the BBC from the 39 minute mark.  

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