December is normally considered to be a quiet month in the world of property as people take stock and begin planning for the new year. However, 2023 has proven to be unusual in many ways and that includes a busier end to the year than normal.
Interest Rates
In the last month we have seen the Bank of England freeze interest rates for the second time in a row following months of rises. Inflation has fallen faster than expected and that has allowed the Bank to make a more positive move.
Many experts have predicted that the freeze also signifies the base rate of interest has peaked and will begin falling again soon. The next rate assessment will be done before the end of the year and gives property buyers much to look forward to. Overall, it is projected that the base rate of interest will return to 4% again within a year.
What effect will that have on the UK property market and mortgages? Click here to read more about how the interest rate freeze will affect property buyers.
House Prices
It has also been a more positive move in the world of house prices. While Rightmove reports that asking prices are lower than the five-year average for this point in the year, that is to be expected after a tough 2023.
However, new analysis from the Office for Budget Responsibility (OBR) shows that the picture isn’t quite as dim as it might appear. There has been a downturn in 2023, but by the end of December the OBR forecasts that the average house price will have gone up by 0.9% this year – a remarkable figure in the most challenging market we have seen in some time.
It illustrates the fact that while there have been many negative headlines around property prices supposedly falling, in many cases it has simply been a decrease in the rate of growth more than widespread falls.
This is backed up by the latest UK House Price Index from Zoopla which shows a 15% rise in the number of houses sold year-on-year. The market is active and healthy – indeed, it is significantly more active than normal in December.
Rental Market
Finally, we turn to the rental market which had another good month and continues to be a bright spot for property investors.
A report from Savills released this week shows that the average UK rent has risen by more than a quarter since March 2020 and by 9.5% year-on-year. It is expected that the imbalance between supply and demand will see this growth continue in the future.
Emily Williams, a director in the Savills residential research team, said: “Competition for stock is tough, and tenants are having to bid upwards to secure a tenancy, supported – but only in part – by a strong growth in incomes, fuelling rents upwards in the short to medium term.”
She added: “It’s very difficult to see where an increase in rental supply will come from in the next couple of years.”
A great example of this in practice is the Manchester market which is outperforming the national market by a lot and is likely to keep doing so in the future. Click here to read more about how the lack of supply and overwhelming demand in Manchester could lead to further rental growth of more than 21% by the end of 2027.
Want to learn more about UK property opportunities and the property market in December 2023? Get in touch with our team today by clicking here.
