Key Highlights

The UK property market saw some challenges and setbacks in 2023, with the UK’s economy going through particularly turbulent times. However, falling house prices and rising interest rates have made it hard to predict what will come in 2024.

Despite the uncertainty, investors can take into account plenty of factors that will play a part in determining how the UK property market will go. Here’s a roundup of estimates for the coming year. Remember to always get a professional opinion first before making a purchasing decision.

The UK Property Market Predictions For 2024

House Price Growth

The UK housing market saw its fair share of turbulence last year. House prices fell during 2023, dropping by 1.8%. This figure is in comparison with December 2022, which was 4.5% higher during the record highs the country was experiencing in the summer of 2022. This decline in house prices can be attributed to several factors, namely economic turbulence and buyer demand falling. 

However, it is not all doom and gloom. 2024 predictions are hopeful, with the housing market expected to gradually increase and house prices to go up over the year. So far, there has been a lot of optimism for investors as the Bank of England has already raised the base rate enough to bring back inflation to its target goal – further reducing rates to come. 

For Rightmove, the average UK house price is continuing to rise as we make our way through 2024. The average price of newly marketed properties has risen by 1.5% (+£5,279) this month to £368,118. This is noticeably higher than the historic average March increase of 1.0%. This highlights recovery after a difficult 2023. The average asking price is still nearly £5000 below the peak of May last year, meaning that more people are seeing potential opportunities to purchase.

Buyer Demand

Despite the economic fluxes and rising interest rates, the demand for the purchasing of homes has remained steady and positive. The Bank of England recorded an 18.5% increase in mortgage approvals, which is generally a strong indicator of buyer demand. How does this translate into actual sales? So far, sales of properties have been quite steady. The HMRC has reported quarter-on-quarter transactions highlighting stability, with a strong flow of motivated buyers. The HMRC has reported an incredible 15% increase in sales compared to the previous year.

While higher mortgage rates have slowed down the overall number of moves and new purchases through mortgages, there has been a significant uptick in cash sales. Cash sales are often a method by investors, showing that the UK property investment market is still going strong. Investors buying in cash can have more power and often get discounts on the property, sometimes getting it for below market value. The average cost of a cash purchase last year was 10% lower than the national average mortgaged house sale of £304,361. Not only is buyer demand increasing, with about 15% of new properties coming onto the market since the start of the year. A further 20% more agreed sales have occurred at the beginning of the year versus the same time a year before.

It is predicted that in 2024 these positive trends will continue, with more investors securing deals and generating growth and more confidence in the market.

Tenant Demand

As buyer demand for those buying a property to live in has dropped recently, a likely trend we might see in 2024 is a large uptick in tenant demand. As more and more people are putting off buying a property due to interest rates and the difficulty in predicting house prices, these people may opt to remain renting or move to a rental if they had different living arrangements prior.

One of the biggest reasons buyers are put off getting on the property ladder is that a large number are waiting for interest rates to drop. So far, there has been a significant increase in property sales falling through. According to the property website Quick Move Now, 31.3% of property sales fell through before completion in the first quarter of 2024. The reason? Figures show that almost 47% of these failed sales were due to the buyer attempting to renegotiate a price or changing their mind.

While the sales may have been unsuccessful, these people do need to live somewhere. It is expected that if buying-to-live properties see a drop in sales this year, then the demand for tenanted housing may increase. Tenant demand might go up, particularly in cities and other popular areas, with buy-to-let areas potentially seeing an increase in viewings, interest, and demand.

Interest Rates

For those opting for a mortgage to finance their investments, it is worth reconsidering other financing options if possible. Mortgage rates have a huge impact on a property’s affordability and the general demand for property.

The Bank of England did perform small raises in interest rates between 2022 and 2023, and since then interest rates and mortgage rates have remained stable. Despite these increases, they are expected to fall this year. However, this fall is predicted to be slow and may have fluctuations. In 2022, rates were around 2 to 3%. For those purchasing a property today, these rates will be between 4 and 4.5%.

Potential cuts to interest rates could happen this year, though this is dependent on inflation. Inflation did fall last year, but the annual inflation rate stands at 3.4%, which was recorded in March 2024. This is above the Bank of England’s 2% target.

It is generally expected that interest rates will remain stable throughout the year, but if there are fewer mortgages, buyer demand might stay low – which will result in house prices falling. In the event of a higher mortgage supply and a steady interest rate, it will result in higher housing demand and higher house prices. In the event of buyer demand falling, tenant demand may increase as a response.

For investors, searching for other options, such as longer-term mortgages, shopping around for mortgage deals, or buying in cash can circumvent issues surrounding high mortgage rates.

Economic Factors

The UK economy has seen some turbulent times recently. From a disastrous mini budget introduced in 2022 by Liz Truss to rising interest rates, from GDP growth and wage growth to low employment, it can be hard to predict what will come next.

What will influence the housing market economically this year?

So far, the UK economy is bouncing back and regaining strength. Unemployment has remained stable for 2024 and wages have risen, meaning more disposable income for tenants. The economy is expected to continue growing modestly, but consistently. 

While it can be hard to predict the property market for the UK as a whole, there are regional variations that differ from the UK average. Regions and cities that do not suffer economic fluctuations as keenly might experience stronger house price growth and also see an uptick in tenants.

Summary

With volatile markets and changing financial futures, it can be hard to find the right investments and build wealth. Both experienced and new investors can benefit from using a property investment agency and their services. They can help you locate properties, secure deals, and even manage lettings.

North Property Group is a property investment agency and lettings agency with a focus on UK new build and off-plan real estate. Our experienced team has a rounded and in-depth knowledge of the UK’s real estate market and can offer professional and targeted advice to help you find premium UK off-plan property opportunities. Book a free consultation with us today to get started.