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UK Property Market Insights: Notable Trends & Forecasts for 2024

Posted by Jehan Anis on December 25, 2023
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Over the past year, the UK property market has experienced a myriad of fluctuations – from a subdued sales market to a thriving rental sector, all amid significant economic and legislative changes. As we step into 2024, let’s delve into the key trends of 2023, explore burgeoning regions with promising growth potential, and delve into the anticipated outlook, offering insights for buyers and investors navigating the evolving UK property landscape.

UK Property Market Trends in 2023

1. Subdued Sales Market

In 2023, the UK property market demonstrated stability, with average house prices at £291,000. While some areas maintained price stability, others, such as the East Midlands and Northwest London, witnessed declines, reflective of cautious buyer behavior and uneven market performance.

2. Rising Rental Prices

In contrast, the rental sector saw continuous growth, fueled by limited rental properties and heightened tenant demand. Private rents surged by 5.7% in the 12 months leading up to September 2023, projecting an estimated 5% growth in 2024. This upsurge highlighted challenges, particularly for affordable housing seekers.

 

3. Declining House Prices

Although October saw a minor uptick of 0.9% in house prices, the annual trend remained negative, reflecting a 3.3% decline, hinting at a continued market correction and price adjustment phase expected to persist in the upcoming year.

 

4. Mortgage Approvals and Completions

September saw a decline in new mortgage approvals, potentially signaling reduced property completions. Despite this, 43,000 new mortgages were approved, suggesting a cautious lending environment and restrained buyer activity.

 

5. Rental Market Strength

The rental market showcased robust growth, with a notable 10.1% annual rental increase in September. This expansion was widespread, except in the South East and West Midlands, driven by intense competition for limited rental stock.

 

Legislative and Economic Influences in 2023

1. Interest Rate Rises and Cost of Living

Successive interest rate hikes and increasing living expenses strained household budgets, contributing to a more cautious market atmosphere.

 

2. Declining House Building and Planning Permission

A reduction in planning permissions due to decreased demand and escalating mortgage rates posed challenges for the construction sector, emphasizing developer complexities.

 

3. Mortgage Guarantee Scheme Extension

The extension of the mortgage guarantee scheme aimed at supporting borrowers, alongside proposals to simplify house-to-flat conversions, potentially opening new investment avenues.

 

4. Housing and Development Investments

Governmental commitments towards housing developments and urban quarters indicated efforts to address housing shortages and stimulate urban growth.

 

Emerging Property Hotspots in UK

1. Slough

Situated west of London, Slough emerges as an investment haven due to its accessibility, business presence, and ongoing redevelopment, offering diverse property options at relatively lower prices.

 

2. Liverpool

Renowned for its cultural heritage, Liverpool ranks favorably for property investments, driven by demand for buy-to-let and student accommodations, promising robust returns.

 

3. Bolton

Located in Greater Manchester, Bolton’s advantageous location for commuting and growing population foresees a thriving property market.

 

Driving Demand in Emerging Regions

 

The burgeoning demand propelling the property growth in Slough, Bolton, and Liverpool is fueled by an amalgamation of pivotal trends:

 

1. Growth Potential: 

These areas boast strong growth indicators, encompassing innovative infrastructure projects, significant business investments, and burgeoning housing developments. Such indicators are often synonymous with heightened demand and accelerated price appreciation. Population expansion and promising job opportunities further underscore the growth prospects.

 

2. Affordability: 

Emerging locales typically offer housing at more competitive prices, harboring substantial potential for growth as demand escalates. Investing in these affordable regions presents an opportunity for amplified returns as invested capital yields higher value.

 

3. Amenities: 

Introducing an array of novel amenities, from retail outlets to culinary havens, recreational parks, and efficient transportation networks, elevates an area’s allure and livability quotient. This influx of amenities fuels housing demand and catalyzes price appreciation.

 

4. Accessibility: 

Proximity to key cities and transportation hubs significantly amplifies desirability. Being within reasonable commuting distances via trains and motorways enhances an area’s attractiveness for both residential living and investment purposes.

 

5. Rental Demand: 

A robust and expanding rental market is a cornerstone for investors. Regions with burgeoning populations of renters, notably young demographics and families, denote a burgeoning demand for rentals, subsequently fueling the appreciation of property prices.

 

6. Regeneration Initiatives: 

Local government interventions aimed at redeveloping and revitalizing these locales through strategic housing, amenity, and infrastructure investments wield a positive impact on property prices. These regeneration initiatives often magnetize private investments and attract fresh residents, contributing to the region’s growth.

 

The Evolution of Sustainable Housing in the UK

 

Throughout 2023, a prevailing trend in the UK has been the transition towards sustainable housing. UK property market updates highlighted a surge in green construction, modular building techniques, and the integration of renewable energy sources. Coupled with government incentives, these initiatives have paved the way for fresh prospects, fostering growth and innovation within the property market.

 

Green Construction and Net-Zero Initiatives

The UK’s unwavering commitment to achieving net-zero emissions has spurred substantial investments in the green construction sector. Projections indicate an estimated £90 billion infusion into this sector by the decade’s end, with £26 billion already allocated since October 2021. This investment surge has not only generated numerous employment opportunities but also catalyzed a transition towards a low-carbon economy. Forecasts for the UK housing market underscore the shift towards green construction, enhancing the quality and sustainability of new developments, making them more appealing to eco-conscious buyers and investors.

 

Embracing Modular Building

The rising prominence of modular design in construction, heralded for its efficiency and sustainability, has been a notable highlight in UK property market news. Off-site construction methodologies have significantly curbed waste and emissions. The global market for modular building is anticipated to reach $157 billion by the year’s end, indicating its growing relevance. This trend is poised to continue in the UK, presenting innovative solutions for sustainable residential and commercial property investment developments.

 

Ground Source Heat Pumps (GSHPs) and Geothermal Energy

The increasing adoption of GSHPs, leveraging geothermal energy for domestic heating, has gained substantial traction in the UK. The impending ban on new gas boiler installations in 2025 has expedited the shift towards these sustainable heating systems. The incorporation of GSHPs marks a significant stride towards sustainable living. Projections estimate approximately 19 million geothermally-powered boilers to be installed by 2050, heralding a transformative shift in the domestic heating landscape, aligning it with overarching environmental objectives.

 

Factors Influencing the UK Property Market Outlook for 2024

 

What trends will define the forecast of the property market in the UK? The upcoming 12 months and beyond in the UK property market will be shaped by several crucial factors:

 

Economic Downturn

Anticipated higher interest rates and an economic downturn are poised to impact housing transactions and prices, potentially leading to a further decline in house prices.

 

Overvaluation of the Housing Market

House prices in the UK have surged by nearly 90% since 2010, primarily attributed to ultra-low interest rates and quantitative easing. This inflation has rendered housing unaffordable for many prospective buyers, with the house price-to-income ratio soaring beyond nine times income.

 

Escalating Interest Rates

The upsurge in interest rates has significantly affected mortgage expenses, diminishing purchasing power and resulting in reduced demand. With mortgage rates climbing from 2% to approximately 5%, households’ borrowing capabilities have notably decreased.

 

The Dilemma: To Buy Now or Await 2024 in the UK?

Forecasts for the UK housing market aren’t definitive, and the decision to buy a house now or defer until 2024 hinges on individual financial circumstances, prevailing market conditions, interest rates, and long-term aspirations.

 

Delaying until 2024 may prove beneficial if you’re striving to accumulate a larger down payment, which could secure more favorable mortgage rates and lower monthly payments. Additionally, it might circumvent the requirement for private mortgage insurance imposed for down payments below 20% of the home’s value. While housing prices and interest rates fluctuate, awaiting a more opportune market setting could result in savings and improved mortgage deals.

Forecasted Dip in House Prices for 2024 in the UK

The outlook for 2024 in the UK housing market suggests an expected drop in house prices, with most experts foreseeing a decline ranging between 5% and 10%. 

 

Reflecting on the UK property market developments in 2023, characterised by subdued sales, escalating rental prices, legislative adjustments, and a burgeoning emphasis on sustainable housing, the forecast for 2024 anticipates a continuation of these trends. For further insights into property predictions, reach out to our experts.

 

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