Outlook for prices improving
It is clear that there are reasons for optimism for the UK property market in 2024, but can similar signs of positivity be found in the data?
In short, considering that many analysts were expecting the market to crash as a result of the heightened cost of borrowing, the outlook looks much better than it did this time last year, or even a few months ago.
A study by the Building Societies Association, for example, found that one in three (33 per cent) homeowners and buyers now think that UK house prices will rise over the next year. This compares to a figure of just 20 per cent in Q3 last year.
What’s more, in spite of all the challenges that the market has faced, the number of sales agreed this year is only 13 per cent below the same period in 2022 – clearly, doom-mongering predictions of a complete collapse were exaggerated.
However, the economic climate was always going to have an impact on the forecasts, and despite the positive trends outlined above, data from Rightmove indicates that the average UK house price will still soften by 1 per cent in 2024 rather than return to growth.
BTL provides opportunities
Fortunately, the future of other types of property investments – such as buy-to-let properties – look rather bright.
Rental price growth in 2023 currently stands at 6.1 per cent, and this kind of growth should continue in 2024.
According to data from Savills, rental prices will rise by 6 per cent by the end of the year.
Meanwhile, demand in the private rental sector from would-be buyers is expected to stay high until affordability in the mortgage market has improved somewhat.
Therefore, combined with the prospect of interest rate cuts and lower mortgage rates, investors could see their rental yields experience an uptick the next 12 months.
Sustainability
The final trend that is likely to remain prominent in 2024 is sustainability.
Earlier this year the government performed an abrupt U-turn on incoming EPC regulations, relaxing rules about the energy efficiency of rental properties.
The news was not met well. Many landlords had already invested in their portfolios in order to bring properties up to the requisite EPC rating.
However, whether the EPC regulations are introduced or kicked further into the proverbial long grass, there is no denying that sustainability will remain an important consideration for property investors.
A recent study from Uswitch found that two-fifths of UK house hunters would consider paying a premium for prospective homes to be more energy efficient.
Moreover, data from Rightmove has shown that improving a property’s EPC rating from a D to C could see an increase in value of 3 per cent, while moving from an F to a C rating could increase the property’s value by an average of an additional 15 per cent.
