2024 has started strongly and many worries that investors had about the market are fading into the distance as house prices increase, mortgage rates fall and confidence in the market grows.
This is the ideal time to take a step back, assess the market and take a fresh look at property as you plan for the years ahead.
Read on to learn about the top three trends for property investors in 2024, and pick up some property investment tips along the way…
House price growth positive in the medium- and long-term
The big story for those investing in property in 2024 is that house prices have recovered from the slight dip in 2023 and are now rising again. This follows wider economic challenges which affected the housing market along with everything else.
Demand is rising and that has led to house prices growing once more. Positivity has returned to the market and investors can benefit.
Tom Bill, head of UK residential research at Knight Frank commented: “It has been a sluggish two years for the UK housing market as interest rates returned to normality but August may prove to be a turning point. The first rate cut in more than four years and lower-than-expected inflation numbers should boost demand this autumn and we expect average prices to rise by 3% in 2024.”
Nathan Emerson CEO at Propertymark, agrees, saying: “It is positive to witness further growth within the housing market despite some of the uncertainties consumers have faced this year.
"Across the coming months, we should start to see a greater level of affordability and confidence return, as the rate of inflation remains within the initially targeted range and with interest rates now taking their first steps to a controlled pathway downwards."
Have interest rates and mortgage rates in the UK peaked?
One of the big issues in the property market over the last 18 months has been the affordability of borrowing and the effect that has had on demand.
Rising interest rates following inflation caused mortgage rates to shoot up to over 10% in some cases. That stopped many people entering the market and the lowered demand caused house prices to stall, and in some cases even fall.
However, the Bank of England is now confident that inflation has fallen sufficiently and cut the base rate of interest in August for the first time in over a year.
The market expected this change and many lenders got ahead of the cut to begin offering reduced mortgage rates. In the case of Nationwide, they offered the UK's first sub-4% mortgage rate for at least a year - and other lenders are beginning to cut their rates to match it.
It is anticipated that the Bank of England will cut the base rate further in the coming months, with speculation that the next cut could be as soon as September.
In total, analysts expect the rate to fall to somewhere between 3% and 3.5% in the next 18 months. That will keep the cost of borrowing down and help to reinforce the housing market.
Read more about how mortgage rates are expected to fall here.
Rents are high and set to continue growing
Investing in buy to let property is about more than just house prices and mortgage rates. Just as important are rental returns – and the growth of the rental market is a hugely positive 2024 trend for investors.
More people in the UK are renting privately every year, especially with the higher costs of borrowing last year. That kept many people in rental homes who might otherwise have wanted to buy, and it meant that investors had an even larger pool of potential tenants than normal.
This had two positive effects. Firstly, it meant that void periods all but disappeared in markets like Manchester and Birmingham where there were always more tenants to fill any gaps. Properties were rented within days, sometimes without people even viewing them, and that situation continues today thanks to a lack of housing supply.
Secondly, the increased competition for homes pushed rents higher and higher across the UK. This competition has caused Savills to update its long term rental forecast. The agency now believes that rents in the Uk will grow by an average of 18.1% by the end of 2028.
It's the start of a new cycle and this is a great time to invest in UK buy to let property.
To find out more about UK property and why this is the right time to invest, get in touch with our team today by clicking here >>
