As the summer months come to an end and the market goes into an anticipated winter slow-down there are several indicators suggesting that both demand and supply remain positive for the UK housing market.
Savills’ predictions
Since Savill’s last November forecasts the outlook for 2024 has largely improved as a result of promising economic conditions and lower borrowing costs. At the beginning of last November Savills forecast that house prices would fall by an average of -3.0% in 2024 and that housing transactions would remain at around 1m for the year. At that time a 75% loan to value mortgage from Nationwide on a two-year fix cost 5.34% and mortgage approvals were down below 50,000 per month.
As a result of a more stable market and improved buyer sentiment in 2024 they now expect UK house prices to rise by 2.5% this year.
Post-summer house prices
The latest market data indicates that UK house prices hit a two-year high last month, in a sign that the property market has recovered from the aftermath of Liz Truss’s infamous mini-budget that sent borrowing costs soaring in 2022.
Asking prices were also up by 0.8% in September, according to Rightmove, double the typical month-on-month average for this time of year, pushing the average cost of a property to £292,505.
The north-west of England reported the strongest annual growth at 4%, while London continues to have the most expensive property prices in the UK, at an average of £536,056, an annual increase of 1.5% compared with last year.
Long term predictions show a similar trend, and the north west continues to offer investors and buyers exciting opportunities as enthusiasm for cities like London wanes thanks to a rising number of digital nomads who can work from anywhere and a growing sentiment among first time buyers purchasing for a higher quality of life.
With its prime location, buzzing student population and growing popularity for major companies to set up new bases, north west cities like Manchester have seen exciting house price growth in recent years, with Savills predicting growth will hit 28.8% by the year 2028, the highest of its predictions across the UK.
Manchester is currently undergoing regeneration in the city center and surrounding areas, with many properties available for purchase, and with the average cost still far below what you can expect to pay in London, averaging £246,891 in the last 12 months, it’s an exciting prospect for buyers and sellers.
On the other hand, Savills’ five year prediction for London is the lowest out of the nation, at just 14.2%. Demand for property in the capital and the city’s population growth has outpaced its development, and according to a study by the Institute for Fiscal Studies, house prices in London are £21,000 higher over five years than they would have been if the capital had kept pace with the rest of England’s.
Mortgage rates
Increased market activity this year has been supported by falling mortgage rates. Lending rates had been dropping in the lead-up to the much anticipated cut to the base rate that occurred at the start of August when the Bank of England dropped the rate to 5%.
Several lenders are now offering loans with rates below 4%, with Barclays and Nationwide launching five-year fixed rates at 3.71% and 3.74% respectively, tempting many first time buyers who had previously delayed plans to join the property ladder.
Long term market forecasts
Oxford Economics’ forecast for GDP growth over the next five years has increased from 7.2% to 8.9%, and wage growth predictions grew from 15.8% to 16.4%. This combined with interest rate cuts has led to Savills updating its five-year UK forecast from 17.9% to 21.6%, and the distribution of growth is also now expected to be slightly more even over the five-year period. A strong economic performance in 2025 and 2026 will support buyer sentiment and likely further stimulate the UK property market.
With the property market showing signs of consistent buoyancy, now might be the perfect time to move ahead with property and investment plans. Consulting with an industry professional is vital to ensure you move in the right direction for your personal financial and property goals, whether it be renting, buying or selling property in the UK market.
Contact Tailor My Property today and connect with our expert network of financial and property professionals who can assist and advise as you explore and navigate potential opportunities
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