Housing market surveys remain mired in negative territory, with the likes of Rightmove and Zoopla continuing to report that a higher than usual numbers of sellers continue to cut asking prices.
Though fixed rate mortgage costs have eased back, they are still much higher than many borrowers had become accustomed to. Moreover, a further 1.2mn fixed rate mortgages are coming to an end in 2024 and the first interest rate cut still looks a little way off.
A year of two halves
Add in some caution accompanying a general election and it looks like a return to sustained price growth is more likely to be a phenomenon of 2025 than 2024.
Instead, we expect 2024 to be a year of two halves: modest price falls of around 3 in per cent the first half of the year, and little if any movement in pricing in the second half of the year, with transactions broadly on par with this year and similarly weighted to equity-rich buyers.
This means that prime markets (broadly the top 5 per cent to 10 per cent of a given market by value) synonymous with cash and equity-rich buyers will recover more quickly than their mainstream counterparts.
Thereafter progressive cuts in base rate should gradually bring more buyers into the wider market and increase their purchasing power, giving capacity for price growth of around 18 per cent over the next five years.
From a rental perspective, we expect a tail-off in rental growth to lag a fall in wage growth, given the extent of the disconnect between supply and demand in the rental market.
With the renters reform bill expected to hit the statute books in 2024, we expect investor activity to be largely confined to larger cash-rich landlords.
On that basis we expect that rental growth will rise by a further 6 per cent next year, before affordability pressures mean it will return to lower levels of growth between 2025 and 2028.
Lucian Cook is head of residential research at Savills
