The Midlands New Build Market 2024 - 2025: Our Projections.
As a new build buyer's agent, I've been closely monitoring the latest trends and data from various sources to provide my clients with the most accurate and insightful projections for the housing market. The first half of 2024 has shown resilience and growth despite economic challenges, and the outlook for Q4 2024 and 2025 remains optimistic. This blog looks into the current market dynamics, focusing on the West and East Midlands, particularly South Staffordshire, and provides projections based on the latest data and market trends.
Key Takeaways
Average house prices in the UK are expected to rise by 1.5% by the end of 2024.
The West Midlands saw a 3.7% increase in house prices in South Staffordshire from April 2023 to April 2024.
The East Midlands reported a 15% increase in sales agreed in Q1 2024 compared to Q1 2023.
Interest rates have remained stable at 5.25%, with potential reductions expected later in the year.
Consumer confidence is increasing, leading to higher demand and market activity.
Current Market Overview:
Zoopla House Price Index (June 2024)
The Zoopla House Price Index for June 2024 reported that house price inflation was flat at 0% in May 2024, but UK house prices are on track to be 1.5% higher by the end of the year. Despite the static inflation, there has been a notable rise in house prices across all regions over the last three months. However, the annual rate of house price growth remains negative across southern England, although it is rising elsewhere.
Key statistics from the report include:
The average house price in the UK is £264,900 as of May 2024.
Demand is 6% higher, and sales agreed are 8% higher than the same time last year.
75% of the 1.1 million sales projected for this year are either complete or in the sales pipeline.
Regional Focus: The Midlands
West Midlands Market Report
The West Midlands has shown significant resilience and growth. The average house price in South Staffordshire was £306,000 in April 2024, up 3.7% from April 2023. This increase is higher than the overall rise in the West Midlands, which was 2.0% over the same period. The region has also seen a rise in private rents, with the average rent reaching £852 in May 2024, an annual increase of 10.5%.
Key insights include:
First-time buyers in South Staffordshire paid an average of £258,000 in April 2024, a 4.2% increase from the previous year.
Homes bought with a mortgage had an average price of £312,000 in April 2024, up 3.8% from the previous year.
Detached properties in South Staffordshire averaged £426,000, while semi-detached properties were £270,000, terraced houses £215,000, and flats and maisonettes £143,000.
East Midlands Market Report
The East Midlands has also experienced growth, with a 15% increase in sales agreed in Q1 2024 compared to Q1 2023. The region's property values are climbing, with Nationwide and Halifax indices reporting positive annual price growth of 0.6% and 1.1%, respectively, in April 2024.
Key insights include:
Average asking prices have risen by 4.6% in the North East of England and 3.5% in the North West of England.
In Leicester and Northampton, the prime markets, cash buyers have been in a strong position, with the average cash purchase being £25,994 cheaper than the average mortgage price.
Economic Factors Influencing the Market
Interest Rates and Inflation
The Bank of England has maintained the interest rate at 5.25% for the sixth consecutive time. However, there is optimism about potential reductions later in the year, which could lower fixed-rate mortgages and boost market sentiment. The current economic stability has led to increased consumer confidence, with mortgage approvals at their highest point in 18 months.
Consumer Confidence
Consumer confidence has been on the rise, with the GfK Consumer Confidence Tracker reporting a two-point increase in April 2024. This renewed confidence is contributing to higher demand and activity levels in the property market. In the West Midlands, sales agreed are up by 16% compared to Q1 2023, while in the East Midlands, they are up by 15%.
Projections for Q4 2024 and 2025
West Midlands
The West Midlands is expected to continue its growth trajectory, with modest increases in house prices and rental values. The region's resilience during higher interest rates and its rising consumer confidence suggest that demand will remain strong.
Projections include:
House prices in South Staffordshire could rise by an additional 2-3% by the end of 2024, reaching approximately £312,000 to £315,000.
Rental values are likely to increase further, with potential annual growth of 8-10%, pushing average rents to around £900 by the end of 2024.
East Midlands
The East Midlands is also poised for continued growth, driven by strong market momentum and rising consumer confidence. The region's affordability compared to the South of England makes it an attractive option for buyers.
Projections include:
House prices in the East Midlands could see a 3-4% increase by the end of 2024, with further growth of 2-3% in 2025.
Sales activity is expected to remain robust, with a continued increase in agreed sales and higher demand for both new builds and existing properties.
The New Build Market & Opportunities for Buyers
New build properties remain a popular choice for buyers, offering modern amenities, energy efficiency, and often lower maintenance costs. The Midlands, with its affordable prices and growing demand, presents excellent opportunities for new build buyers.
Is it a Buyer’s Market or a Seller’s Market?
The UK housing market, particularly in the West and East Midlands, has shown resilience and growth in the first half of 2024. However, determining whether it is a buyer’s or a seller’s market depends on various factors including regional trends, property types, and economic conditions.
Buyer's Market Indicators:
Interest Rates: The Bank of England has held the interest rate at 5.25%, with potential cuts anticipated later in the year. High mortgage costs have impacted affordability, particularly for first-time buyers. However, the potential for reduced interest rates could shift the market dynamics, making it more favourable for buyers.
Rising Inventory: An increase in the number of properties available, coupled with a rise in sales agreed (15% in the East Midlands and 16% in the West Midlands for Q1 2024), suggests more options for buyers. Increased inventory typically indicates a buyer’s market, as sellers may need to compete more on price and concessions.
Price Sensitivity: Buyers are increasingly negotiating prices, with many offers being accepted below asking prices. This trend indicates a shift towards a buyer's market, where purchasers have more leverage in price negotiations.
Seller's Market Indicators:
Stable Demand: Despite higher mortgage rates, demand has remained stable, and consumer confidence is rising. This stability suggests that sellers still find interested buyers, particularly in regions like the Midlands where prices and demand are growing.
Rising Prices: In South Staffordshire, for instance, house prices have risen by 3.7% year-on-year, indicating that sellers can still achieve good returns on their properties.
New Build Market
The dynamics of the new build market can differ from the general housing market due to several factors:
New Build Market Trends:
Strong Demand: New builds often attract buyers due to modern amenities, energy efficiency, and lower maintenance costs. In the Midlands, with its affordability and growth, new builds are particularly appealing, suggesting strong demand.
Government Incentives: Schemes like Help to Buy can make new builds more accessible, increasing demand and potentially shifting the market in favour of developers and sellers.
Price Stability: New builds tend to have more stable pricing due to their appeal and the incentives available, making it slightly less of a buyer's market compared to older properties.
Conclusion: Mixed Market Dynamics
Overall Market:
The UK housing market in the Midlands is exhibiting mixed signals, leaning slightly towards a buyer's market due to price negotiations and potential interest rate cuts. However, stable demand and rising prices suggest that sellers still hold a strong position.
New Build Market:
The new build market remains robust with strong demand, making it more of a seller's market compared to the general market. Buyers are attracted to the benefits of new builds, and government incentives further support this demand.
As a new build buyer’s agent, it’s crucial to stay informed about these dynamics to provide clients with accurate advice. While buyers currently have negotiating power, particularly for existing homes, new builds continue to be in high demand, offering a more competitive environment for sellers.
Key considerations for new build buyers:
Take advantage of potential interest rate cuts later in the year to secure better mortgage rates.
Explore government schemes such as Help to Buy, which can make purchasing a new build more affordable.Consider the long-term benefits of a new build, including lower energy bills and fewer repairs.
Conclusion
The UK housing market, particularly in the West and East Midlands, is showing resilience and growth despite economic challenges. With rising consumer confidence, stable interest rates, and strong demand, the outlook for Q4 2024 and 2025 is positive. As a new build buyer's agent, I recommend staying informed about market trends and taking advantage of potential opportunities in the Midlands. Whether you're a first-time buyer or looking to move up the property ladder, the Midlands offers a promising landscape for homebuyers.
This comprehensive blog post aims to provide a thorough understanding of the current housing market and projections for the Midlands and the UK in general. If you have any further questions, need additional insights, or want to explore our Buyers Agent service, feel free to reach out.
Citations
Zoopla House Price Index: June 2024
Office for National Statistics data, April 2024
GfK Consumer Confidence Tracker, April 2024