What does the housing market have in store for 2024?
As the year 2023 comes to a conclusion, the UK housing market is experiencing a more favorable outcome than expected. The latest projections suggest a lack of unpleasant surprises in the coming year.
The mortgage market is gradually stabilising, albeit with rates higher than those seen before 2022. Increased housing stock levels are offering greater choices for buyers, contributing to a positive outlook for the housing market in 2024.
Despite the challenges of the past year, including rising energy costs and a broader cost-of-living crisis, as well as increased borrowing costs, the demand for UK property has remained resilient. This resilience has helped maintain property prices, alleviating concerns of a potential housing market crash.
At the beginning of 2023, Rightmove had anticipated a 2% decrease in asking prices, yet current figures show only a 1.3% decrease from a year ago. This signals a return to a more ‘normal’ market after the post-pandemic rush and subsequent price hikes.
Indices like the one published by Nationwide, which base their assessments on sold price data rather than asking prices, reveal a consistent monthly uptick in pricing over the past three months. This upswing is buoyed by a more optimistic perspective on interest rates, sparking increased interest in the housing market. Projections from Inews and various lenders suggest that rates could potentially dip below 4% by the middle of next year*, further contributing to the positive momentum in the real estate sector.
The significance of pricing and location cannot be overstated. In some areas, gauging confidence and demand has been challenging, resulting in more homes selling below the asking price and longer times to secure a buyer. However, competitively priced properties are selling swiftly, emphasising the importance of setting an appropriate initial price.
Tim Bannister, a property expert at Rightmove, advises new sellers to start with a competitive price, maximising the chances of a successful sale. Local variations in supply and demand levels mean that each location has its own trajectory, with some areas in the north outperforming in terms of buyer appetite and maintaining stable or rising prices.
As we look ahead to 2024, Rightmove anticipates ongoing outperformance in specific regions, with notable examples including Manchester and its surrounding areas. According to Savills, Manchester is poised for remarkable house price growth, projecting an impressive 24.3% increase by 2026—well above the average UK growth rate. This compelling forecast underscores the importance for property investors and buyers to shift their focus from national forecasts to a more nuanced consideration of local market dynamics.
Tim Bannister anticipates a modest 1% fall in new seller asking prices in 2024, citing sustained demand at the right price as a factor preventing a more significant price drop. In the rental sector, rents have been rising faster than house prices, creating challenges for tenants but increasing the need for rental stock in the UK housing market.
Property investors, concerned about short-term capital appreciation, are placing greater emphasis on rental yields. Many are focusing on higher-yielding areas with strong levels of tenant demand, a trend expected to persist in the medium term.
While the news may have been somber for a considerable duration, there’s a distinct sense of optimism as we approach the upcoming year. Whether you’re in the market to buy, invest, or sell your home, GD Property Solicitors stands ready to be your trusted guide through the entire process. Secure your free quote here and let us navigate you towards a brighter and more promising property journey.