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2023 turned out to be an unpredictable year in the property market, the mortgage market proved difficult and prices stuck, which led to a bit of a bumpy ride. After experiencing an incredibly busy three years following the Covid-19 pandemic, and the price lifts it caused to the property market, we were unsure what 2024 would bring.
The dramatic increase in both mortgage and interest rates last year also meant that many people chose to stay in their existing homes rather than enter an uncertain property market. However, the first three months of 2024 have proven that a lot of last year’s uncertainty has lifted for many people as the market has been the busiest it has been for a long time.
We asked Foden Property Director Katie and Sales Manager Jenny to share their thoughts from quarter one of the 2024 property market.
The Lettings Market in 2024
The lettings market in the Telford area continues to boom and be incredibly busy. Whilst property sales slowed down in 2023, the lettings side of the business continued to be inundated with enquiries from people looking for homes to rent.
Demand for rental properties continues to outstrip supply which means that monthly rents in the area remain high. This problem will only be solved if more good rental stock becomes available, which unfortunately is not something that will happen overnight.
Higher mortgage rates have meant that many landlords are choosing to leave the market altogether. We see lots of properties being put up for sale by landlords which have tenants in situ, which unfortunately makes them less attractive to potential buyers. As these properties are only likely to be purchased by existing landlords, it means they often sit on the market for longer than the seller would like.
Many landlords are now finding themselves in the situation of giving notice to their tenants so that they can then sell the property as vacant in order to achieve a quicker sale. This option is obviously not very helpful to the tenants who then find themselves having to look for a new rental property in an already overcrowded market.
Even though landlords can command higher rents, they are still having to pay higher rates of interest and stamp duty on their rental properties which means that often the sums do not add up. We are definitely seeing a contraction in the lettings market this year which is a cause for concern especially as we await for the Renters Reform Bill to come into effect.
The Sales Market in 2024
2024 has been a fantastic year so far for our sales team. January was the busiest month for take ons that we have seen for about 3 years and completely superseded all our expectations. We were inundated with valuation requests from people looking to sell their homes in January and have remained busy over the last few months.
This has meant that there have been lots of new properties coming on the market for buyers to choose from, but more importantly for sellers, these homes have been selling well. Many of the properties which came on the market in January actually sold in February which is fantastic news for everyone involved.
However, whereas during the pandemic we saw dramatic price rises as the demand for new properties was greatly outstripping the supply, now sellers need to make sure they are pricing their homes sensitively. Due to the increase in the number of properties going on the market this year, buyers are able to choose from as many as 20 properties within their preferred size and price bracket. Compare this to during the pandemic when buyers may have only had three properties to choose from, which they then had to compete with lots of buyers for.
We are definitely experiencing a flux in the market this year as we move from a very seller driven market to a buyer driven market which will naturally adjust prices. Before you put your home on the market, you really need to be sure that you want to sell your home as now is not the time to test the market. As buyers have so many properties to choose from, they will not make an offer on a house which they believe is overvalued compared to the competition.
If someone is valuing your home then make sure you challenge the price if you think the agent is promising you a higher price than you think you might be able to get. The only way to value a property is to use evidence based research using knowledge of the market in which your home will be entering. This is also the same evidence which lenders will be using when it comes to working out how much of a mortgage they will be willing to offer on your home. If the lender doesn’t believe that your house will sell for the value offered by the agent, then they will not lend someone the money to buy it and your home will end up being downgraded. Therefore it is really important to make sure your home is priced sensitively before it goes on the market.
We have also noticed that prices are being built based on outdated information; from 2022 or earlier in some cases. Not all agents adjusted to the changing market in 2023, therefore we are starting to see valuations following the trajectory that started in 2020 which means they are almost building on false figures.
As an example, say a house goes on the market for £260,000 but doesn’t actually sell at that price. Because it had an initial valuation at this price it is being used as a bedrock for how much the house would be worth if it sold today. The trajectory might tell them that that house is now worth 10% more so a higher valuation is being added to this home, even though there hasn’t actually been a 10% growth in the market. Prices which are still escalating have been built on a false bedrock.
When you are being presented with comparables, you need to know where that information has come from. Have the properties you are being compared with actually sold? And if they have, did they make the full asking price? We have to make sure that we really take all of these factors into consideration when we are valuing your home. If we are not offering you a price sensitive valuation then there is a chance your property will not sell, or at least not as quickly as you would like it to.
Final Thoughts
Despite the ongoing concerns with the lettings market and the lack of good quality housing stock, we remain optimistic for the year ahead. We also hope that the year continues to be as good as it started for our sales team with lots more stock and lots of buyers. Both buyers and sellers might need to have a little more patience than they did a couple of years ago as properties are taking a little longer to complete. But remember, so long as your property is priced sensitively, it will sell.
Get in touch if you would like us to help you sell your home this year!
The full conversation between Katie and Jenny is available to listen now as part of our “Ask The Agents” podcast series on Spotify and YouTube.