Is the property sector showing signs of recovery?
Despite socio-economic challenges and fluctuating interest rates impacting the UK property market, the property sector starts to show signs of recovery, although experts continue to warn about ongoing economic uncertainties.
House prices and sales have been on the rise in the UK during the first three months of 2024. Nationwide Building Society’s latest house price index shows that house prices increased in the year up to 1.6% in March, showing some sort of recovery for the market, though still very modest. Whilst activity is still much lower than pre-pandemic times, it is higher than in Q1 of 2023, suggesting that buoyancy in the property market is slowly making a comeback.
Buyers and sellers have been noticeably more dynamic since the beginning of 2024 as it would appear that the Bank of England’s base rate has peaked, meaning the next change to rates should be downwards. In addition, what happens next with mortgage rates will have significant further impact on activity within the market, thus creating a ripple effect on house prices and demand.
Internal sales figures for receivership cases at CG&Co support the above market trends, indeed they exceed them. We saw a sharp rise in the value and volume of properties sold in Q1 of 2024 compared to Q1 2023. This was from a mix of investors becoming more flexible in their business again, as well as first-time buyers who have perhaps had to delay their entry to the market, whilst interest rates peaked last year.
Predictions
Turning to predictions for the rest of the year, there will still be difficult times ahead for those who have enjoyed low fixed rate mortgage rates during the base rate increases. As the months go by throughout 2024, those whose deals will be coming to end will be looking anxiously at where rates are going, as any reduction in the base rate will be minimal when that time comes.
Turning to predictions for the rest of the year, there will still be difficult times ahead for those who have enjoyed low fixed rate mortgage rates during the base rate increases. As the months go by throughout 2024, those whose deals will be coming to end will be looking anxiously at where rates are going, as any reduction in the base rate will be minimal when that time comes.
Within the bridging market, refinance exits will still prove to be a challenge, given the rate of house price growth, leading to defaults at expiry of terms. Exits by sale may see an improvement, though transactions can often be impacted by a slow conveyancing process, and the continued back log of registration of key documents at HM Land Registry.
It remains key to ensuring maximum return on default loans to act quickly throughout the process; from the beginning when a default first arises on the loan book, and then through the recovery process with commercial decision making and proactive actions to take control of assets and find a suitable exit for the benefit of all parties involved.
For more information, please contact daniel.richardson@cg-recovery.com
This article can also be found in https://www.fiba.org.uk/advantage/
