Residential Research Update December 2024

Publication

Residential Research Update December 2024

It’s the last monthly update of the year, and so in amongst the usual housing market insight, we have included a few Christmas film references to inspire you for The Holiday season.


While some way short of a full Nightmare Before Christmas, Labour’s first budget has created a number of headwinds for the top end of the housing market. 

 

Prime Forecasts 

We have sought to unpick what effect the following measures will have on the prime housing market: 

  • the abolition of ‘non-doms’ status, 
  • the addition of VAT on school fees, 
  • the additional 2% stamp duty surcharge for second home buyers and investors both north and south of the border, and 
  • restrictions on inheritance tax reliefs. 

You can read the full report at your leisure when you find a little time Home Alone over the festive period. It includes our forecasts for prime housing markets over the next five years. There is plenty in it to Love Actually, even if it administers a slight dose of reality.

It includes predictions for 2025 of a 4% price fall in central London, which we expect to wash through the market in the early part of next year. In turn, that is likely to present a strong buying opportunity later in the year.

In comparison, we expect prices to remain flat across the other prime housing markets of the capital and rise by an average of 2% elsewhere.

We figured it would be s-Elf-ish to only cover the sales market, so you can also get a better understanding of what’s expected to drive the rental market from our inaugural Landlord Sentiment Survey, which has helped inform prime rental forecasts

 

Mainstream metrics 

In the run up to the budget we saw something akin to a minor Miracle on 34th Street as mortgage approvals rose to 68,300 in October, their highest level since March 2022.

Meanwhile Nationwide surprisingly reported annual mainstream house price growth of 2.4% in October, Trading Places with 3.7% in November, though we wait to see if such a large uptick is a result of any Gremlins in the data.

Data from Twenty CI certainly supports some ongoing resilience in the market with newly agreed sales in November 7% above the pre-pandemic norm and 14% above last year. However, it sits against the context of increased concerns that inflation – having increased above the Bank of England’s 2.0% target again – will slow the pace of future rate cuts.

That’s something we will be watching closely in 2025, but only after putting to bed the usual debate as to whether Die Hard and Lethal Weapon can be classified as true Christmas films.

So far, fixed-rate debt costs have only risen marginally, marking a year of much greater stability in the mortgage markets. And so, as I keep a close eye on the weather forecast to see how likely A White Christmas is, all that remains for me to say is I wish you the very best for the festive season, and I’ll see you next year.

 


 

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