Thu 14 Dec 2023
Unlocking the Secrets of the Housing Market in Epsom, Surrey, with Kaybridge Residential Estate Agents
In the ever-changing landscape of the real estate market, understanding the pulse of affordability is like deciphering a map to navigate its highs and lows. As we step into 2024, Kaybridge Residential Estate Agents delves into the intricate web of data and forecasts to provide you with insights into the future of home buying affordability.
Affordability as a Barometer
Affordability serves as a crucial barometer for the health of the housing market. It's a measure that reflects the proportion of household earnings required to meet mortgage payments, offering a snapshot of whether the market is reaching unsustainable peaks or poised for a recovery. In our analysis, we've considered several factors, including mortgage rates, swap rates, and earnings growth, to paint a comprehensive picture of what lies ahead.
A Glimpse into 2024
The year 2024 holds promise for potential homebuyers as a convergence of factors points towards an improvement in affordability. Chief among these factors is the expectation of more favorable mortgage rates. This anticipation is a beacon of hope, suggesting that the market might witness a tentative recovery in buyer confidence.
The Role of Mortgage Rates
Lower 5-year swap rates, recorded at 4.4% at the close of November, act as a precursor to a potential boon for homebuyers. The correlation between swap rates and mortgage rates suggests that the latter is poised to improve, further enhancing the overall affordability scenario. As mortgage rates play a pivotal role in determining the financial burden on homebuyers, a decline in these rates can be a game-changer for the market dynamics.
Our analysis draws upon a wealth of data sources, including #Dataloft, ONS, Bank of England, and Nationwide. Affordability calculations are based on first-time buyer (FTB) prices, considering 1.5 full-time incomes per household, an 80% loan-to-value ratio, and the average new lending mortgage rate. Earnings growth forecasts for 2024, estimated at 3.4%, add a layer of realism to our projections. By the end of 2024, we expect the average new lending rate to improve to 4.5%.
In our forecast, we anticipate a modest decline of -1% in FTB prices for the remaining quarter of 2023, followed by stabilisation. This projection aligns with our overall narrative of improving affordability, paving the way for a more balanced and sustainable housing market.
As we stand at the threshold of 2024, the real estate market appears to be on the brink of change. With affordability set to improve, driven by anticipated lower mortgage rates, buyers may find themselves in a more favorable position. Kaybridge Residential Estate Agents remains committed to providing informed insights, guiding you through the intricate currents of the housing market. Stay tuned for updates as we navigate the waves of change together.