As spring rounds the corner and leaves the winter season in its wake, those familiar with the housing market may be questioning if the typical spring “bounce” in house prices is on the cards. As 2023 saw a lot of turbulence in the housing market thanks to unpredictable mortgage rates, the spring months of the year disappointed many would-be property investors by falling short of their usual spike in prices. Almost a year later, the uncertainty of 2024 still leaves many with room for doubt.
While 2023 is now behind us, spring could mean many things to property investors. So, for a deeper understanding of seasonality in property investment and why it may be a good idea to buy-to-let before the spring, look no further than Concept Capital Group.
What Makes the Housing Market Seasonal?
The UK housing market has always been subject to trends, many of which have been covered by this very blog. While obvious impact factors like interest rates and the cost of living crisis are heavily publicised, however, the seasonality of property investment is less spoken of.
Due to the rash of interest, mortgage and bank rate hikes in 2023 and the lingering impact of COVID on property, some have suggested that the modern housing market is no longer as influenced by seasonality as it used to be. But, while the ongoing threat of a ‘mortgage meltdown’ has made it hard to turn our attention to anything else, seasonality still has a role to play in today’s housing market, with the Financial Times even suggesting that the mortgage crisis might have enhanced its impact last spring.
Leading financial institutions, property firms and building societies factor the differences in prices and demand at various points throughout the year into their indexing as ‘Seasonal Adjustment’. Nationwide, for example, bases its house price indexing methodology around the assumption that property tends to be more expensive during the spring and the summer. Rightmove, on the other hand, leaves their data unadjusted to better reflect the impact of seasons on house prices over certain periods. Though there is still some disagreement on their significance, seasonal dips and bounces in the market have some influence on house prices.
The Pros of Investing in Property Before Spring
While spring has been known for its consistent “bounce” in house prices and the summer months of June, July and August are cited as the most popular for moving houses, winter is often a slow period for the housing market. This is in part due to the cold and the bustle of the holiday season discouraging most sellers from listing their properties, leading to a decrease in demand.
Property investors can stand to gain from the lack of available buyers in the winter months. According to a recent study of seasonal house prices, residential property has historically cost an average of 8.45% less in January and February than they do in June, July and August. Last year even saw an especially significant seasonal fall in house prices, with November registering its biggest percentage drop in five years.
Analysis of year-round house sales figures by Rightmove further reveals that February may be the best month to list a home on average, with sellers finding buyers quicker than they have in other months. Despite this, the early winter period of 2022 also saw the busiest festive period for home-mover activity ever seen by the property company, with demand rising by 23% compared to the same period last year and Boxing Day – often referred to as the beginning of the winter buying season – boasting its highest number of new sellers since its records began.
More recently, 2024 has already brought a wave of fresh property opportunities for those willing to invest in property before spring, with Rightmove reporting a 15% increase in the number of new properties coming onto the market for sale and a 5% increase in buyer demand compared to the same period in 2023. This not only indicates a return of buyer confidence in the housing market following 2023’s dizzying impact, but also one of the most potentially lucrative foundations for property investors to safely enter the market in several months.
Another consideration when investing during the winter season is the lack of competition and openness to negotiation among sellers means that homes are less likely to sell at a premium during winter months, with Time’s personal finance team reporting that November, December and January are among the months least likely to have a home sell at a premium on its price. Time also noted a bump in the availability of real estate professionals and home inspection appointments during winter months, giving property investors added leeway to vet the quality of potential investments before they make a decision.
When investing in property before spring, many investors can enjoy advantages that allow them to better leverage their capital, cut down on initial buy-in costs and maximise their potential profit down the line. With mortgage approvals falling for the first time since 2021, a late winter investment in a residential property now could be a source of much-needed financial stability later, especially with Knight Frank predicting a spring bounce as mortgage costs lower.
A Portfolio for All Seasons with Concept Capital Group
At Concept Capital Group, we try to avoid December dips and the Ides of March. Instead, we build and tenant buy-to-let modular homes that will maintain a fixed value throughout their length to buy time-poor, risk-sensitive property investors some peace of mind.
While some may enjoy playing the seasonal waiting game, we offer stability in the form of consistent annual returns of 10% on the £42,999 spend of our clients, allowing every investor to enjoy passive income regardless of their experience in property investment. And, when spring comes around again this year, our clients can enjoy greener pastures knowing every home purchase puts a vulnerable family in the comfort of a high-quality, affordable modular home
To find out more about our fixed-value property investment opportunity, book a call with our team today.