5 experts take on UK house prices, mortgages, and renting

2023 proved to be a chaotic year for tenants, landlords, and homeowners across the country as the surging prices of rents and mortgages combined with falling house prices.

Five property experts were asked about their predictions for the next 12 months in 2024 to better understand the real estate market.

  1. Rents will probably go up, but not as fast as one can imagine.

As tenants recover from the massive 9.4% surge in rents last year, they are optimistic that 2024 will be different.

The head of research at Hamptons, Aneisha Beveridge, states that compared to last year, the rents won’t surge as fast as they did back then.

“We expect rents to continue rising in 2024, probably by around 7%. This growth will continue to be buoyed by a lack of homes available to rent combined with higher landlord costs — particularly as more investors roll off cheaper fixed-rate deals to find themselves remortgaging at higher rates,” she conveyed.

  1. Tenants are more likely to leave cities.

The founder of Lessons in Lettings, Sarah Walker, anticipates many tenants will leave cities due to surging rent prices.

“With the ever-increasing costs in living, it’s my prediction that many tenants will simply leave the larger cities altogether due to basic financial commitments of rent, bills, and groceries, leaving them with nothing left in the piggybank to go out and enjoy themselves and all that their surroundings have to offer.”

  1. 25% of landlords are likely to sell by August.

Landlords are as desperate as the tenants and want to sell off their properties due to the unpredictable nature of the housing market.

As per estate agent Lordsons, 25% of landlords are likely to sell off their properties by August 2024.

It seems that landlords are just as fed up with the housing market as their tenants.

“Factors such as soaring mortgage rates, diminishing returns on investments, and changes in capital gains tax allowance contribute to this trend,” it stated.

The new Renters Reform Bill and increased regulations are likely to prompt landlords to give up their properties.

  1. House prices are likely to decline this summer.

It was a rollercoaster ride for tenants, landlords, and homeowners, so how does 2024 look for the real estate market?

“The prospect of interest rate cuts towards the end of the year means we expect the market to have bottomed out by the summer, even if the prospect of a general election pushes the start of a recovery into 2025,” as per the head of residential research at Savills, Lucian Cook.

“Lower mortgage rates and more economic stability should halt house price falls in 2024,” says Beveridge.

“Household incomes are now rising faster than inflation, which should improve affordability a little and bring more buyers to the market. We’re expecting 0% price growth across Great Britain in Q4 2024, based on the ONS House Price Index, with growth returning in 2025.”

  1. Less expensive areas to become more popular over time.

“Formerly overlooked residential markets in the commuter belt around London will remain in focus as people continue to re-calibrate their work-life balance and find better value in less-connected locations. In general terms, less expensive parts of the UK will see stronger demand and house price growth as affordability constraints continue to restrict buyers,” the head of UK residential research at Knight Frank, Tom Bill, conveyed.

  1. The Bank of England is anticipated to cut interest rates five times.

In 2023, borrowers felt the pinch due to the steady increase in mortgage rates. However, as per the experts, 2024 will be different.

“In October, financial markets were pricing in a single interest rate cut of 0.25% by the end of 2024. By the end of last week, they were expecting five,” as per Bill.

“The main reason for this changing outlook is that inflation is falling faster than expected. As a result, mortgage lenders have dropped their rates fairly significantly in recent weeks, partly to win business in a low-volume market.”

  1. Three-year fixed-rate mortgages will become widespread.

Along with changing mortgage rates, the types of mortgage products for borrowers are also likely to change.

“Options for fixed rates at two- and five-years will still be around, but I predict the less competitive three-year rates will become more popular and competitive,” as per Walker.

“With the Bank of England rate cuts, we will see more competitive products across the board, giving prospective homeowners more choice and flexibility.”

  1. The election is unlikely to make any difference

The country will go to the polls as general elections are likely to be held this year before January 2025.

“We don’t expect it to have much of an impact on the housing market,” continued Beveridge.

“With both of the main political parties fighting for the center ground, the chance of radical change, which can often spook house-hunters, is lessened.

“While buyers and sellers in the top end of the market might be a little more cautious, as it’s often here that the big tax changes hit hardest, a stronger affordability backdrop should mean more moves take place across the whole market this year than in 2023.”

  1. The March budget will likely boost the real estate market.

Although the elections will have a minimal impact on the real estate market, it would be interesting to know what the Conservative Party does to woo voters towards them.

“Activity could be boosted by pre-election giveaways in the March budget,” Bill started. “There is speculation surrounding tax cuts as well as measures to help first-time buyers, including longer fixed-term mortgages, smaller deposits, and a revived help-to-buy scheme.”

- Published By Team Timeswire

Leave a Reply

Your email address will not be published. Required fields are marked *