Regional Property Market Update Spring 2024: Devon and Cornwall

Signs of green shoots are appearing in the property market. More buyers are returning to the market, supported by falling mortgage rates, wage growth outstripping inflation, and a strong labour market.

Economic backdrop 

With the Bank of England holding the interest rate at 5.25%, the consensus is that we are at the top of the rate rise cycle. Interest rate expectations in the monthly consensus forecasts have been improving over recent months as the economic outlook brightens (HM Treasury Average of Independent Forecasts). Rates are predicted to start falling in the second half of the year, reaching 4.4% by the end of 2024. With inflation under control and forecast to fall to 2.2% by the end of the year (HM Treasury Average of Independent Forecasts), confidence in the housing market is improving. 

Growing activity 

With the Bank of England holding the interest rate at 5.25%, the consensus is that we are at the top of the rate rise cycle. Interest rate expectations in the monthly consensus forecasts have been improving over recent months as the economic outlook brightens (HM Treasury Average of Independent Forecasts). Rates are predicted to start falling in the second half of the year, reaching 4.4% by the end of 2024. With inflation under control and forecast to fall to 2.2% by the end of the year (HM Treasury Average of Independent Forecasts), confidence in the housing market is improving. 

Slower pace

In the year to February, average rents across the UK rose by 7.4% to £1,262. Average rents increased by 0.2% January to February, with all regions seeing a monthly rise except for the South East, Yorkshire and the Humber, Wales, Northern Ireland and London (HomeLet). Rents are still forecast to rise in 2024, albeit at a slightly slower pace. A net balance of +41% of agents envisage rents rising over the next three months, as demand continues to outweigh supply (RICS). However, many landlords are keen to keep existing renters: 75% would maintain a rent level if they were happy with the existing renter, rather than take a new renter who would pay more (Dataloft, Property Academy Landlord Survey 2023). 

The Chancellor has also abolished the furnished holiday lettings tax regime, which should help to level up the buy-to-let sector and unlock more full-time tenancy stock in major cities, tourist hotspots and coastal communities.

Early signs for the market in 2024 are increasingly positive, with metrics for buyer demand, sales and new instructions all turning positive (RICS). Choice for buyers is on the rise, with available homes for sale 20% higher than a year ago (Zoopla). Improved market conditions are boosting the chances of a sale, although sellers must continue to present their property well and at a reasonable price if they are serious about moving in 2024. Half of agents say offers are currently being accepted up to 5% below initial asking price; however, 15% report this level or higher (Dataloft Inform Poll of Subscribers). 

Average property values in the South West are 24% above 2019 levels, equivalent to a rise of £62,617 (UK HPI December 2023). Price growth since before the pandemic is strongest in South Hams and Mid Devon.

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