2024 is upon us already, and the property market is already making a solid start in January. Both the rental and sales markets are thriving as the year begins, and landlords and homeowners alike look set to benefit. So, what’s happening in the UK property market?
A Rise In Monthly Average Rents
Since January 2023, there has been an increase of 9% in the average monthly rent. This has added approximately £1200 to a typical annual bill over the past 12 months. The start of 2024 will still be difficult for tenants, who now have to find the equivalent of a month’s average rent on top of their previous annual bill. On the other hand, this is good news for landlords enjoying good profits from their investments.
The average monthly rent nationwide as we enter 2024 is now £1200, almost double that amount typical in the capital. It’s worth noting that rental growth is predicted to start slowing down as the months go on since worsening affordability will likely keep the demand under control. Some markets are already resistant to high rents, so landlords should keep this in mind when considering further price hikes.
House Price Increases Since December
Homeowners looking to put their properties on the market this January could benefit from house price increases. There have been predictions of 3% increases over those from the end of last year, as the prospect of potential cuts in the interest rate alongside more affordable mortgages is likely to result in more transactions.
After 2023 saw sustained falls in house prices, it was forecast that 2024 would experience a further drop of 4% before the year-end. However, that now appears to have been a premature estimate. An increase in mortgage approvals received over recent months is now believed to translate into a minimum 10% rise in transactions this year.
Since December, new sellers’ asking prices have increased by approximately £4571, which represents the most significant growth for this time of the year since pre-Covid times. Although overall costs are still 0.7% lower than those from a year ago, experts say that this year’s start looks quite promising as buyer demand grows and 15% more properties are coming onto the market. According to Rightmove, the beginning of the month saw five more sales being agreed on than this time in 2023, which indicates buyer confidence is returning.
Forecasters have also predicted that house prices are unlikely to drop significantly before the end of the year, with a decrease of only around 1% nationally expected by December 2024, thanks to an underlying strong level of buyer demand.
Competitive Pricing Crucial For January Sellers
Although the increase in asking prices is good news for January sellers, it’s essential to remember that competitive pricing will be crucial when finding a buyer. Even though the month so far has seen growth in buyer activity, the number of properties listed on the market still outpaces the number of purchasers making enquiries. That means realistic and accurate pricing for the local area lies at the heart of securing a sale, and sellers should resist the urge to price their UK property over-optimistically.
Cheaper Mortgage Deals
Although Howard Davies, chair of NatWest, sparked criticism with his statement earlier this month that it wasn’t ‘that difficult’ to get onto the property ladder, buying a home will still be unaffordable for many prospective purchasers in 2024. Yet there is some promising news on this front.
Mortgage deals are already becoming a little cheaper, with 5-year fixed-rate mortgages now averaging at 4.86%, down from a peak of 6.11% last July. Rates are also expected to reduce further in the weeks and months ahead, with the best deals coming in under 4%. It has been predicted that borrowing costs will be cut by the central bank from its existing 5.25% rate to under 4% by this time in 2025, and that should reduce the cost significantly of taking a mortgage out.
Mortgage Time Bomb Potentially On The Horizon
Although those taking out a new mortgage may benefit from reduced costs, a mortgage time bomb could be on the horizon for the millions of UK property owners coming to the end of their cheaper deals. Around 1.5 million homeowners will face a considerable increase in the amount they have to repay every month, and that could mean an average family having to find an extra £1800 a year to cover their housing costs.
A Strong Start To The Year
With the growth in the market, thanks to more affordable mortgage deals and an increase in UK property prices, 2024 is getting off to a buoyant start this January. As we head towards Spring, it will be interesting to see just how well the experts’ predictions pan out and whether February will be an equally positive month for landlords and sellers alike.
What Next?
We are delighted to bring you our property market updates each month.
If you are considering buying or selling a property, don’t hesitate to contact the team at Properly on 0207 459 4400 or email mariel@properly.space.
