There have been promising signs of market recovery observed in the first quarter of the year and this uptick in activity suggests there was pent-up demand. The cost of debt easing has encouraged these buyers to finally enter the market, taking advantage of falling mortgage rates in January and February.
Savills predicts that a further rate cut will likely result in another flurry of activity in the second half of the year. They believe that there will be increasing activity and capacity for price growth from 2025 onwards thanks to a stronger economic performance and a steady reduction in the bank base rate.
However, with a worrying lack of supply, many are wondering if the new homes market will be able to keep up with the recovery and subsequent demand. Completions have been down for the last few years, and the delayed impact may start to be felt even more in the near future. Savills states that all sizes of developers have recorded a similar reduction in the volume of plots starting on-site. Starts on sites of all housing, including rental homes, are down -24% and private units are down -27% in the year to Q1 2024 when compared to 2023.
Further Reading: Find out about the best area to buy a rental property or take a look at some passive income ideas.
