For property investors and landlords alike, this year has been one marked by unpredictability. Fluctuating mortgage rates have kept would-be homebuyers and unlucky homeowners in dire financial straits, while slowed housebuilding has painted a bleak picture of the housing market’s future viability.
But what exactly can we expect to see more or less of in 2024? Our team has put together three key developments that could spell disaster or good fortune for the UK housing market.
1. A (Small) Fall in House Prices
Have mortgage rate hikes and market instability kept you from investing in new property this year? Perhaps you had to hold on to a home you would have rather sold, or you were forced to delay plans to exit the market altogether due to low profit margins.
Unfortunately for some, house prices are projected to continue falling in 2024 as they have throughout 2023.
According to an article released by The Guardian, leading mortgage lenders like Halifax and Nationwide have suggested that the year is unlikely to see a rebound in house prices. Rather, experts predict that the price of an average UK property will fall by up to 4% due to persistently high interest rates impacting both mortgage affordability and the rate of sales completions. This would be a continuation of this 2023 market downturn, where mortgage approvals and sales completions both reached their lowest levels in 10 years and 4 in 5 housing markets are registering annual house price falls.
Those interested in buying and selling property next year may not be in an entirely hostile market, however. A recent forecast released by Rightmove suggests that buyers may be in a more advantageous position due to falling seller asking prices. This year, 39% of properties being sold through the property company registered an asking price reduction and increase from 2022’s number of 29%. And, while the average time for a seller to secure a buyer has increased from 45 days last year to 66 days now, homebuyers are likely to enjoy a much stronger position for negotiating and securing desirable properties in 2024.
2. An (Eventual) Fall in Mortgage Rates
Mortgage rates have been a major source of pain for housing market stakeholders this year. The good news is that they could see a bit of a fall in 2024, albeit not to previous peaks of 2%.
As part of their House Price Index forecast for 2024, Zoopla recently reported that mortgage rates are expected to fall back to around 4.5% in the second half of 2024, with rising wages influencing mortgage sales volumes. The report further explains that any potential improvement in housing sales will rely on the financial ability of property investors and buyers to make purchases once mortgage rates dip into the 4-5% range.
Though buyers have been reluctant to make any moves this year due to house price uncertainty and mortgage rate hiking, Zoopla suggests that cash buyers and first-time house hunters eager to escape rising rental costs could become the most significant force in the market as those mortgage rates adjust. Still, as readers of last week’s opinion piece on the state of the housing market might know, there are several obstacles besides mortgage rate inflation that need to be managed to attract the interests of homebuyers and investors more fully in the near future.
Regardless of how buyers are expected to move in next year’s housing market, global commercial property company CBRE predicts that the UK’s residential market could be impacted by the 850,000 two-year and five-year fixed mortgages up for renewal in 2024. With such a surge of potential remortgaging on the horizon, the final word on where mortgage rates will land is still up for debate.
3. A (Big) Slowdown in Rent Growth
Juggling all the expenses that make up the average cost of living has been one of the more persistent challenges facing renters this year, but, despite consistently rising throughout 2023, rent growth is expected to slow significantly by this time next year.
According to an article from The Independent, the UK’s annual rental price growth, which is currently at 9.7%, is expected to fall to 5% by December 2024. This could indicate that the country is past its peak growth phase and spell positive things for the average renter. Although average rent prices for newly let properties are still roughly 10% higher than in 2022, a falling growth rate when paired with a recent rise in wages could be the first step towards more affordable rents that beleaguered private tenants have sorely needed.
Although rents are still expected to increase overall, especially in London, even the nation’s capital is forecast to see smoothened rent growth due in part to rental supply overtaking demand.
How Can I Prepare for 2024?
Economic downturns are an inevitable consequence of investing in private housing, as the market is closely tied to the overall fiscal state of the nation. Landlords who invest in private rented property especially can expect to see highs and lows in rapid succession in the next few years.
Property investors who wish to avoid the risk factors associated with the private sector without relying on the chronic undersupply seen in the social housing sector can enjoy the best of both worlds when they invest in affordable buy-to-let modular homes with Concept Capital Group.
Our properties are not only mortgage-free, but they also benefit from modern methods of construction that cut down on price and build time. For as little as £42,999, you can unlock a 10% annual ROI from a risk-averse, high-demand investment opportunity that offers fixed rental income and exit strategies that allow you to recoup your capital should you wish to move it elsewhere.
To find out more about investing in the property of the future just in time for the new year, contact our team today.