Nearly a quarter of UK homeowners who had intended to list their properties for sale in January have since withdrawn from the market, according to recent research by the comparison platform GetAgent. A survey of 1,011 property vendors revealed that 24% are no longer planning to move in the immediate future, indicating a notable shift in seller sentiment and market dynamics.
This substantial withdrawal of properties from the market could have various implications for the UK housing sector. A reduction in the supply of available homes, particularly after the traditional post-Christmas surge in activity, could lead to tighter competition among buyers and potentially underpin property values in certain areas. For first-time buyers, already facing hurdles with higher mortgage rates and deposit requirements, a shrinking pool of available homes could make securing a purchase even more challenging.
The decision by a significant proportion of sellers to pause their moving plans may be influenced by several factors, including fluctuating mortgage rates, the broader economic outlook, or a perceived lack of suitable onward purchases. While the Bank of England's base rate has remained at 5.25% since August 2023, mortgage product rates have seen some volatility, affecting affordability and borrower confidence. For instance, average two-year fixed mortgage rates, though down from their 2023 peaks, still remain elevated compared to pre-2022 levels, impacting borrowing capacity.
Existing homeowners who were looking to downsize or upsize might be reconsidering their options, potentially due to the costs associated with moving, including stamp duty. For a property priced at the current average UK house price, which Rightmove reported as £362,839 in February 2024, stamp duty can be a significant expense. The current stamp duty holiday on the first £250,000 of a property's value (or £425,000 for first-time buyers) provides some relief, but the costs beyond these thresholds can still deter movers.
The regional variations across the UK property market mean that the impact of these withdrawals may not be uniform. Areas with historically high demand and limited supply, such as parts of London and the South East, might feel the effects more acutely, potentially leading to more competitive bidding. Conversely, regions with a greater balance of supply and demand might see less immediate impact on prices, but still face a reduced choice for buyers. Zoopla's latest data, for example, highlighted that price growth continues to vary considerably across the country, with some northern regions still seeing modest gains while southern areas face greater stagnation.
Landlords, too, could be affected if the reduced supply of properties translates into fewer investment opportunities or if existing landlords decide to hold onto their portfolios rather than sell, further tightening the rental market. This trend suggests a period of caution and uncertainty among property owners, which could lead to a more subdued transactional market in the coming months.