How agents can make the most of market recovery

Two years of rising interest rates, the withdrawal of first-time buyer support, planning delays and a string of broken promises has positioned the housing market as a point of contention. 

In the absence of consistent government support, the property industry has been forced to quickly adapt to market needs. For context, private enterprise has delivered 60% of new housing – this statistic alone demonstrates the agility, responsiveness, and importance of SME developers to respond quickly to the shifts within the market.

The cycle upswing

To better anticipate market shifts in a pivotal year for the housing industry, we recently published a research report in collaboration with Dr Nicole Lux. The intention behind the research was to use historic property market data to establish where we currently sit in the property cycle, and to help industry decision-makers navigate ongoing market uncertainty. 

To create an in-depth understanding of the housing market’s peaks and troughs, a range of factors need to be considered including house prices, inflation, interest rates, demand, supply, mortgage rates, unemployment and population growth. Historical data can provide a useful portrait of the cyclical nature of the housing market and, in turn, allow informed predictions to be made for the short and medium term. 

Overall, data indicates that we are now approaching the lowest point of the housing cycle which, crucially, will be followed by a period of recovery. Stabilised interest rates, positive demand and increased house prices are all around the corner. However, the time to capitalise on this incoming market upswing is now, and estate agents have an important role to play in this resurgence. 

Delivering to demands

As agents will be well aware, demand for residential properties is steadily increasing due to changing household structures, population shifts, and unemployment levels. The ONS predicts that between 2018 and 2028, the number of households in England is projected to grow from 23.2 million to 24.8 million, an increase of 7.1% (1.6 million). This equates to an average of 164,000 additional households per year. This, in tandem with the aging population of over 85s expected to double over the next 25 years, demonstrates the capacity for residential development, particularly rising demand for later life accommodation. In addition, UK unemployment levels remain at circa 4% - meaning that based on trends recorded over the past 55 years, unemployment levels are nearing historic lows. Considering all of these factors, it’s safe to say that increased demand for residential property is robust. 

Estate agents offer a unique insight into these influences on housing demand from a front-line perspective. Sharing these insights through close collaboration with SME developers can result in informed strategies for building the right product and attracting the right buyers and kickstarting the housing pipeline.

Learning from historic downturns

We can also learn a great deal from the frequency and duration of residential property market downturns. 

We are currently experiencing a period of decelerating growth in UK house prices which began between July and August 2023 and demonstrates our sixth downturn since 1969 (ONS). Typically, deceleration periods last 16 months and are followed by a period of substantial recovery. As such, previous data would suggest that we are in the trough of the cycle and can therefore anticipate an upswing followed by a period of recovery. 

Acting opportunistically

For estate agents, now is the time to seize the opportunity to work collaboratively with SME developers to get ahead of the incoming market upswing. Housing pipelines tend to take 12-18 months to restock, so while the general election is raising hopes across the industry that the short and mid-term future of the market is bright, acting sooner rather than later will be key to unlocking the housing market and meeting demand.

Read Atelier’s report Past performance points to future potential in full.