Property Sales in Devon More Active Amid National Slump
- Devon fares better than the rest of the country in worst December ever for volume of property sales.
- House prices in Devon are falling, while new house prices are soaring.
- Plymouth is the most affordable place to buy a home in the South West.
Worst December on record for property sales in Devon
Devon saw just 530 property sales across the whole of the region. While property transactions typically slow down for Christmas, sales volume has only ever fallen below this amount twice; once, in January and February 2009, following the economic crash, and again, in April and May 2020, when markets were stalled by the pandemic.
The first quarter of 2024 saw an uptick in activity; however, this has again slowed, as interest rates remain high despite falling inflation. Mortgage lenders may have been too quick to drop their interest rates in January, anticipating a fall which is yet to come, so rates have come up again, and many would be buyers are waiting in the hopes they can secure a better deal, later in the year.
House prices in Devon fall annually for fourth month in a row
Every month from November 2023 to February 2024 saw the average house price in Devon fall versus the same month last year. This matches national trends and is due to the weaker buying power of the population through the cost of living squeeze, high inflation and prohibitive borrowing costs.
How does the Bank of England affect the Devon Housing Market?
House prices tend to rise with inflation (2021) but fall when the base rate comes up (2023); the higher cost of borrowing means buyers have less to spend. The base rate has held steady at 5.25% since August.
The base rate is expected to come down slightly in the summer but may be later than anticipated. The high cost of borrowing keeps pressure on the mini-housing bubble, as would-be homeowners stack up, waiting to buy at a more favourable time. This suppresses house price growth. When the base rate drops and pressures ease, a mini flood to the market will get house prices growing again.
Will there be a UK recession in 2024?
"The Quarterly Economic Forecast (QEF), expects the UK economy to grow by 1.1% for 2024, with the projection for 2025 remaining at 1.0%. The economy is expected to grow by 1.1% in 2026, a minor upward revision." - Source: British Chambers of Commerce (BCC)
This, however, is well below the pre-pandemic average. NEISR estimate that Britain's poorest households will not recover fully until 2027.
Would you like conveyancing services for a Devon property?
Devon property market more active than the rest of the country
December might have been the worst on record for sales volume in Devon, but the county fared relatively well, at 47% of the previous year's transactions for the same month, way ahead of England & Wales which was down at 39% versus last year.
West Devon Wins
Sales volume in West Devon performed better than any district in the region and the country as a whole. The area saw 60% of last year's transactions which was a lively market, under the circumstances. It is closely followed by North Devon which saw 59% of last year's sales.
Torridge had the quietest month for sales volume but still came in just ahead of the national average, at 40%.
South Hams is the most expensive place to buy a home in Devon
The average price of a home in South Hams is now a whopping £413,654, which is £127,318 more than the cheapest area, North Devon, at £286,336.
Winners and Losers in the Devonshire property market
South Hams and East Devon are on an overall upward trajectory since the dip of last spring. West Devon has been fairly volatile but is now just a couple of thousand pounds behind its record high in September 2022.
Exeter, North Devon and Torridge have been falling, and Mid Devon and Teignbridge have remained most stable, although they've not yet recovered to their respective 2022 peaks.
New houses in Devon drive up average price
This trend is more pronounced in certain regions than others but the overall pattern is obvious. Since the house price peak of 2022, average existing house prices in Devon fell through the spring and then stayed fairly steady over the past year.
New builds in Devon apparently missed the memo, and their prices have continued climbing at the steepest trajectory we have ever seen.
"This disparity in price will fuel nearby house prices up as estate agents use these potentially over-priced local comparables when setting sale prices for existing properties in the local area." - Andrew Boast
This could mean new build developments in your immediate location will inflate the value of your home. Great news if you're already a homeowner; bad news if you're a first-time buyer.
What is next for the Devon property market?
Devon County Council is working on a range of infrastructure projects, with partners, to support the growth and resilience of the economy. Infrastructure improvements support housing market growth through better economic prospects for residents, more capacity for building new homes, and improved energy, accessibility, transport and leisure.
Should I buy a house in Devon?
Devon is an excellent location to choose to live:
If you can afford to buy in Devon now, it is likely you'll be able to switch to a more affordable mortgage rate in a couple of years, by which point your investment will hopefully have appreciated in value.
If you are renting and can afford to buy at the current rate of interest, this may be a much more desirable option than saving for a bigger deposit, as rents are set to rise nationally this year by 5% or more (but only 2% in London), whereas mortgage rates are likely to fall.
However, if you are stretching your budget to buy in the area, consider a cheaper location, or saving for a bit longer. We may not be out of the woods yet, and if the base rate (and mortgage rates) rise, you may not be able to keep up with your monthly repayments. Worse yet, if prices do fall, you could end up in negative equity. Buying a home with a mortgage always comes with risks.
If you are ready to buy a house in Devon or the surrounding area, we can handle your purchase with a dedicated SAM Conveyancing Consultant to manage your transaction alongside one of our hand-selected panel solicitors.
"Spring will show an increase in sales volume that is more in line with 2022 than the stagnant 2023, offering opportunities for home buyers and homeowners alike. With more affordable mortgage products and the reduction in the cost of living, the housing market can take a breath after a very exhausting 18 months. "
"While the Bank of England states that a base rate fall is "way off" at the moment, this message is meant to calm mortgage providers and the markets so they can plan further ahead through May and June. The delay will help reduce inflation closer to the target of 2% and ensure a longer term of stability through the rest of 2024 and 2025."
"The major curve ball to this is the General Election and what would happen if there was a changing of the guard."
- Andrew Boast FMAAT MIC
CEO and Author | SAM Conveyancing
Sources: Latest data from - Gov.UK, Bank of England, UK House Price Index.
Caragh is an excellent writer and copy editor of books, news articles and editorials. She has written extensively for SAM for a variety of conveyancing, survey, property law and mortgage-related articles.
Without Killing Anyone
This book could be the difference between every mover’s dream, buying and moving into your new home stress free, or, stress, missed deadlines, legal disasters, building defects, and possibly the collapse of the whole transaction. (Costing you a small fortune, a head full of grey hairs, and, driving you to threaten the life of your solicitor, lender, co-owners, family, partner, or some combination of all five).
With more than two decades’ experience in the conveyancing sector and over 50,000 successful client moves under his belt, Andrew shares insider tips and advice to empower you as a buyer, giving you the tools to make the best decisions for your circumstances and ease the chaos.
Available on Amazon | Kindle | Paperback
