Property Market in 2024

Happy New Year one and all, hope 2024 brings you good fortune!

With the Renters Reform Bill being discussed, a general election looming and the market still recovering from the pandemic, 2024 is going to be an interesting year in the property market!

We still believe that London property is a good investment and there is still plenty of value to be extracted from your property (portfolio).

We wanted to provide some insight into how we see the property market changing in 2024 and how you can prepare or take action to make the most of your property investments.

The biggest factor affecting house and rental prices this year will be inflation and interest rates.

We have seen interest rates being heavily influenced by inflation which has recently dropped to 3.9% in November 2023. This is significantly more than the Bank of England had expected it to fall.

As a result, and as mentioned in a previous blog, it is likely that interest rates have peaked and will (need to) come down this year.

Some investment banks believe interest rates will begin falling as soon as February, whilst others say this is much too soon (and too aggressive) and more likely they will come down in May or June.

Nonetheless lenders have new targets in 2024 which will be issued in the second week of January (when workforce is back). Point being we already saw a bit of a price war in the mortgage market in December 2023 and this will likely ramp up in 2024. We are seeing rates of 4% fixed for 5 years already. And it is only first week of the New Year!

There will be a key focus to stimulate the property market, which is always a hot topic in an election year.

As for the rental market; Savills say rental growth will outpace earnings growth this year and they believe we will see 5.5% rental growth in London, as well as 18% growth over the next five years.

Jones Lang LaSalle see 5.5% growth in 2024, as well as growth of 26% in rental prices over the next five years in Greater London.

Rental growth with the base rate coming down, is good news for investors, which is important because research suggests there are 28% fewer properties listed to rent on Rightmove as there were pre-pandemic. Hence rents have increased, but the property market will continue to see much activity this year.

What does this mean for first-time buyers, experiences landlords or aspiring landlords when it comes to applying for a mortgage? Probably best to hang tight and see how the next 3-6 months pan out because we believe interest rates may come down quicker than originally anticipated.

If you already have a portfolio, make sure you’re getting market rent, because 2024 is likely to be a volatile year in the rental market with the imminent introduction of the Renters Reform Bill. This will likely become law around later this year. And if the rental market is as busy as we believe it will be, you could / should tie into a two or three year tenancy (at market rent) and avoid being affected by the potential initial chaos while the market takes time to respond to changes.

Research suggests that over the next five years property prices in London will be between 15-20% higher.

With this in mind if you’ve got a reasonable yield on your property, with interest rates falling, and that you’re going to see a 15-20% return on your money, it’s hard to argue against London property being an shrewd investment in 2024.