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The UK housing market experiences a year-end boost

Despite activity in the UK property market slowing for a prolonged period of 2023 due to the cost of living crisis and higher interest rates, the close of the year has seen an uptick in the market.

Below we unpack which factors are behind the boost in activity and why now might be the right time to move ahead with UK property plans and investments.

Interest rates are stabilising and starting to fall

The Bank of England recently kept interest rates on hold at 5.25%, indicating that the series of hikes in recent years has ended, and some mortgage deals have fallen back below 5% as a result. In fact, UK property market interest rates are forecast to start falling in the next few

months and could even be down to 4.5% by the year 2025, while numbers from the Bank of

England indicate mortgage approvals hit an unexpected high recently, suggesting an easing in the market.

According to major property entity Savills’ five year projection the Bank will start to cut interest rates in the second half of 2024, reducing its base rate to 4.75% by the end of that year, from 5.25% now. Falling interest rates generally allow the property market to open up as mortgage costs become more affordable, and as a result more buyers enter the market and the demand for houses increases.

It’s a ‘buyer’s market’

Current market factors indicate that the close of the year is a ‘buyer’s market', and according to property group Zoopla, conditions are currently the best that they’ve been for buyers since the year 2018. As a result, the number of house transactions has risen by 15% on last year and the number of homes for sale is at a six-year high with an average £18,000 knocked off asking prices. According to Savills, the average UK house price is projected to fall by 3% in 2024, after a 4% drop this year

While buyer demand is still not back to where it was pre-pandemic, the current market makes

now a great time for buyers to move forward with purchasing and investment plans.

How does the current market impact renters?

The UK has been facing a housing shortage for years with an estimated 4.3 million homes

affected across Britain. This property shortage has consistently placed pressure on rental prices as the current supply can’t meet demand and many households are not being able to afford their own mortgage payments. As the Government moves ahead with a plan to build 300,000 homes a year, short term projections indicate an estimated 4% rise in rental prices over the next 12 months across the UK.

The lack of housing options paired with demand for rental opportunities spurred by many

households moving and downsizing post-pandemic means now is an ideal time to move forward with buy-to-let property investments for potential landlords.

As the end of 2023 marks a boost in the UK property market, potential buyers and investors are presented with a prime opportunity to move ahead with purchasing UK property. That said, there are a multitude of factors to consider when entering or investing in the property market, and seeking professional guidance is a must. Tailor my Property’s network of property professionals and financial experts can assist with a wide range of property, finance and investment related questions to help you explore this exciting time for the market.


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