The atmosphere surrounding the UK property market in January 2024 contrasts sharply with the apprehension that loomed in early 2023. A year ago, the outlook was gloomy, with predictions of ending 2023 worse off than the year began. Although 2023 did not unfold as direly as expected, subdued activity and elevated rates left most eager to bid farewell to the year. As we embark on 2024, there is a palpable sense that this year may yield a more favorable outcome than its predecessor. Whether it's merely the optimism accompanying a new year or grounded in tangible shifts, there are indeed encouraging signs.
Inflation Resilience and Mortgage Rate Relief:
Inflation, while slightly elevated at 4.0% in December, remains within an acceptable range. Factors such as increased costs of tobacco and alcohol contributed to this figure, yet forecasts suggest the Bank of England is on track to achieve its 2% inflation target by spring. Moreover, the property market welcomes news of more favorable mortgage rates in 2024. Best-buy fixed rates have seen a decline from their 2023 peaks, with borrowers now able to access rates as low as 4.15% over two years and 4.09% over five, according to Lifetime Capital. Homeowners rolling off fixed rates and first-time buyers stand to benefit, with the potential for rates below 4%, albeit still higher than pre-2023 levels.
Revitalized Sales Market:
Early indicators in 2024 show a notable uptick in sales activity. According to Rightmove, the first week of 2024 witnessed a 20% increase in agreed sales compared to the same period in the previous year. Average asking prices have also seen a positive shift, rising by +1.3% in the last month. While this surge is typical for the time of year, the growth rate surpasses the 20-year January average, indicating a more robust market. The latest RICS Survey results support this, with December showing an improvement in buyer demand for the fourth consecutive month, bringing the balance to a neutral position for the first time since April 2022.
Balancing Act in the Rental Market:
The rental market, which experienced an 8.0% rise in average rents in the year to December 2023, has shown signs of moderation with a second consecutive monthly decline of 0.9%. Although typical for this time of year, higher stock levels and narrowing imbalances between supply and tenant demand, as indicated by RICS, hint at a more balanced rental market. JLL's rental growth forecast anticipates a 5.0% growth in rents for 2024, slightly lower than 2023 but still above historical averages.
London's New Homes Landscape:
Molior London's 2023 figures shed light on the challenges faced by the London new homes market, witnessing the lowest number of private housing starts since 2010. Factors such as higher debt, increased build costs, and heightened regulatory burdens have contributed to a 47% drop in housing starts compared to the previous ten-year average.
Price Outlook and Forecast:
Despite varied reports from Nationwide, Halifax, ONS, and RICS, the market appears to be undergoing a subtle shift. The RICS survey hints at a market on the turn, with the least negative responses since November 2022. The market may exhibit increased activity, but the full impact on indices might not be evident until 2025. As we navigate the dynamic landscape of 2024, a cautious yet optimistic approach remains prudent for investors and homeowners alike.
The market has already exhibit increased activity and DI Properties are extremely busy with transactions including, sales of blocks of flats , sites with and without planning as well as office buildings.
If you have a property to sell and want confidential free valuations or looking to buy please do not hesitate to contact myself at info@diproperties.co.uk