2023 was a busy and sometimes unpredictable year for the UK housing market, and with 2024 marking an election year with plenty of influencing factors at play, we can anticipate more fluctuation as well as opportunity within the market. Below we cover some of 2023’s major milestones along with projections and predictions for the new year.
House prices went down in 2023
According to data from Nationwide the average house price fell by 2% in the year to November 2023, likely due to a mixture of high mortgage rates, cost of living pressures and low market confidence. The average UK house price is now £283,615 compared to £286,328 a year ago, a fall of £2,713. The months September and August also saw greater annual falls of 5.3%, with the latter marking the most substantial annual drop in house prices since the aftermath of the financial crisis in 2009.
House prices in 2024
Projections indicate that the fall in property prices will continue this year. Estate agent Savills
predicts that prices will fall by 3% in 2024, before recovering in 2025 and rising by 3.5%. Lloyds Bank, the country’s largest mortgage lender, has forecast a further 2.4% decrease over 2024 with prices to then recover slightly in 2025.
However, interest rates may also begin to fall soon, which could then drive house prices up. In its latest major announcement, the Bank of England opted to hold the base rate at its current level of 5.25%. This means that interest rates could fall quicker than expected, which could make buying a home more affordable and reverse the current downward pressure on property prices, making 2024 the ideal year to move ahead with plans to invest in UK property.
How do prices differ for different types of property?
The 2020 pandemic and following years have caused huge shifts in housing preferences and
data from mortgage lenders has shown differences in price trends between property types.
Many workers are continuing to work from home a few days a week, so there is still demand for larger properties with space for a home office. Data also indicates that in the years since 2020 the prices of detached family homes are growing much faster than those of apartments. Figures from Nationwide show that the average asking prices between 2020 and 2022 indicate detached property increased by 26%, or nearly £78,000 while flat prices increased by 13.4% on average, or £23,000.
Rent prices soared in 2023
The typical private rent ended 2023 at 9.5% higher than in December 2022 and are expected to rise a further 6% in 2024 before hitting an “affordability ceiling”, according to the estate and lettings agent Savills. Overall, rents increased by nearly 6% in the first eight months of 2023, its research found, taking total growth since March 2020 when the first Covid lockdown began to 26%. This increase noticed over the past three years or so has been explained by demand for rental properties greatly outstripping supply and the trend is expected to continue throughout 2024.
Which regions offer the most opportunity?
Data from 2023 and predictions for 2024 indicate that the strength recorded in certain regional cities is set to continue. These are the areas currently offering great property investment opportunities:
Manchester
Taking first place in a “Big Six” cities report by estate agency JLL, Manchester’s economy has grown 32% over the past decade. Listed as one of the top areas for office space and student accommodation growth, Manchester has one of the biggest science graduate populations, and the city’s new innovation district will occupy a nine-hectare site near Piccadilly Station which will include 1,350 new homes.
Birmingham
According to data from real estate and investment firm CBRE, population growth and a large rental market gives Birmingham the biggest family home market in five years’ time. With a thriving local economy owed to job growth, business opportunities and foreign investment along with infrastructure developments like the Birmingham Airport expansion, the city offers attractive prices, strong rental yields and a young, professional demographic providing sustained demand for housing.
Edinburgh
Recognised as one of the most desirable places to live in the UK, Edinburgh’s hotels, offices and student accommodation are major growth sectors for Scotland’s capital, attracting a significant number of young professionals and students. The city’s strong rental demand and limited supply have contributed to increasing rent levels and consequently high rental yields for landlords and buyers investing in the area.
Liverpool
The latest Zoopla data reveals that Liverpool is the fastest moving market in England, with the typical seller agreeing an offer within 17 days, half the UK average.
Liverpool’s substantial development in the last few years has made it an appealing choice for property investors. Recent regeneration around the docks, Everton FC’s £500 million new stadium and the nearby cruise ship terminal have brought new life and interest to the area.n The city also offers a vibrant cultural scene, some top universities and job opportunities.
As we usher in a new year the UK property market is primed to offer investors and buyers new chances to invest in property and financial opportunities. For those looking to engage in the UK property market Tailor My Property has an expert network of property, mortgage and finance professionals who are able to advise and assist with a wide range of specialist queries.
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