UK Property Market News: Key Trends and Predictions for 2024

In the past year, the UK property market news recorded a range of trends, including a period of slower growth, a significantly surging rental market and various economic and legislative changes that have had an impact on the market’s dynamics.
In this article, we take a look at key trends in 2023, emerging regions that have captured attention due to their growth potential and explore the outlook for 2024, highlighting what buyers and investors can expect in the evolving UK property market.

UK Property Market Developments and Trends in 2023

Before looking ahead to 2024, let’s take a look at hte trends impacting the market in

• 2023. – Subdued Sales Market
  In 2023, UK property market news trends show that the property market remained stable with house prices costing on average of £291,000. While some areas saw price stability, several regions experienced price declines, including the East Midlands, East of England and Northwest London and the South East. This trend was indicative of a larger pattern of cautious buyer behaviour and uneven market performance.
•  Rising Rental Prices
  In contrast to the sales market, there was a continuous rise in rental prices throughout the year. This increase was driven by a low supply of rental properties and an elevated demand from tenants.
  Private rents increased 5.7% in the 12 months up to September 2023. Renal values across the market are expected to grow 5% in 2023 and the same again in 2024. Trends highlighted the the growing challenges in the rental sector, particularly for those seeking affordable housing.
•  Dropping House Prices
  The UK housing market saw minor growth in house prices in October, but the overall annual trend remained negative. Despite a 0.9% increase in October, the annual change was a decline of 3.3%, reflecting a broader downward trajectory in property values. UK property price predictions state that this trend is expected to persist into the next year, indicating a continued market correction and price adjustment period.
• Mortgage Approvals and Completions
  92,600 transactions were completed in September, according to HMRC, and there was a decline in new mortgage approvals, suggesting a future decrease in property completions.
  Despite this, 43,000 new mortgages were approved in September, which was 34% below the pre-Covid average for the month. This pattern pointed to a cautious lending environment and a potentially more restrained buyer activity in the market.
• Rental Market Strength
  UK property market news showed that the strength of the rental market was highlighted by a consistently high annual rental growth, which stood at 10.1% in September.
  This growth was even more pronounced when considering the increase in most regions, apart from the South East and West Midlands. Rental market growth was driven by intense competition for the limited available rental stock.

Legislative and Economic Changes Impacting the Housing Market in 2023

With the evolving market dynamics, the UK government has enacted various policies and initiatives aimed at boosting the housing market in response to the economic climate. These interventions have played a significant role in shaping the market’s trajectory:

•  Interest Rate Rises and Cost of Living
  The UK housing market in 2023 was impacted by successive interest rate rises and cost of living pressures. These factors strained household budgets and influenced buyer decisions, contributing to a more cautious and restrained market environment.
• Declining Housebuilding and Planning Permission
  2023 saw a decline in planning permissions granted for new projects due to falling demand and rising mortgage rates. This trend was concerning for the construction sector and highlighted the complexities facing developers.
• Mortgage Guarantee Scheme Extension
  The extension of the mortgage guarantee scheme signaled support for borrowers. Proposals to simplify the process of converting houses into flats under the planning system were also introduced, potentially offering new investment opportunities for property owners.
• Investment in Housing and Development
  The government allocated substantial funds towards housing developments and the development of new quarters in key cities. This investment indicated a governmental commitment to addressing housing shortages and supporting urban development initiatives.

Emerging Property Hotspots in the UK Market

UK house price predictions aren’t certain but here are some standout locations in the UK property market due to house prices, rental yields and estimated house price growth in the next half-decade.

•  Slough
  
  Slough, located an hour west of London, is emerging as a promising area for property investment. Its accessibility via major motorways and the presence of large businesses like 3M, Microsoft and Samsung make it an attractive location for investors.
  Ongoing redevelopment is adding new office blocks and apartments to Slough, offering various property types at relatively lower prices compared to other UK areas. It’s an investment location with good growth potential.
  – Average House Price: £375,117
  – Average Rental Yield: 3.7%
  – Price Growth in Five Years: 10%.
•  Liverpool
  
  Liverpool, known for its industrial heritage and cultural landmarks, ranks as the third-best city in the UK for property investment returns. The city’s strong demand for property, including buy-to-let investments and student accommodation, makes it attractive to investors. Liverpool’s property market offers robust returns thanks to a thriving population and ongoing investment.
  – Average House Price: £202,342
  – Average Rental Yield: 5.48%
  – Price Growth in Five Years: 18.9%.
•  Bolton
  
  Bolton, located in Greater Manchester, has emerged as a top property hotspot. With a strong and growing population and advantageous location for commuting into Manchester, Bolton’s property market is expected to thrive in the coming years.
  – Average House Price: £100,000
  – Average Rental Yield: 5.3%
  – Price Growth in Five Years: 10%.

Factors Driving Demand in These Regions

Property growth prospects in Slough, Bolton and Liverpool are driven by a number of trends:

• Growth Potential: Areas with strong growth indicators like new infrastructure projects, business investments and housing developments typically see higher demand and faster price appreciation. Population growth and job opportunities are also key indicators.
• Affordability: Up-and-coming areas often offer more affordable housing prices, with room for significant growth as demand rises. Investing in affordable areas can maximise returns as the invested money goes further.
•  Amenities: The introduction of new amenities such as shops, restaurants, parks and transportation systems makes an area more desirable and livable, spurring housing demand and price growth.
• Accessibility: Areas within reasonable commutes to significant cities and transportation hubs are typically in higher demand. Proximity to transit like trains and motorwarys makes an area attractive for both living and investment.
•  Rental Demand: For investors, a strong and growing rental market is crucial. Areas with a large population of renters, particularly younger people and families, indicate a growing demand for rentals, which drives property price appreciation.
• Regeneration Initiatives: Local government initiatives for redevelopment and regeneration through housing, amenities and infrastructure investment can positively impact house prices. Regeneration programs often attract private investment and new residents. 

Mortgage and Financing News in the UK Property Market

The UK property market news related to the mortgage and financing market is characterised by tightening lending conditions, rising interest rates and government policy to stimulate the market.
These trends have implications for both buyers and investors, affecting affordability, market accessibility and investment strategies.

• A Decline in Mortgage Lending
  UK Finance predicted a softening in the mortgage market in 2023, with a 15% fall in mortgage lending, returning to pre-pandemic levels.
  This decline may lead to tighter competition among buyers and investors for available financing. Investors might need to seek alternative financing options, while buyers could face challenges securing mortgages
• Decrease in Mortgage Approvals
  The overall UK mortgage approval rate dipped significantly from 73,264 first-time buyer mortgages in January 2022 to just 39,637 a year later.
  This trend indicates a cooling property market, possibly due to economic uncertainties. Prospective homeowners may find it more challenging to get mortgage approval, influencing both the timing and the feasibility of property investments.
• Rising Interest Rates
  Mortgage rates have fluctuated, with Q1 2023 figures approaching 5.5 – 6% on average, influenced by increasing base rates. Higher interest rates generally lead to reduced mortgage uptake and approvals. This could make property less affordable for first-time buyers and reduce the appeal of buy-to-let investments due to higher borrowing costs.
• Mortgage Guarantee Scheme Extension
  The government extended the Mortgage Guarantee Scheme by 18 months to June 2025 from December 2023, helping people with 5% deposits get onto the property ladder. The scheme supports first-time buyers predominantly, covering up to 95% mortgages.
  This extension may increase the accessibility of homeownership for first-time buyers with smaller deposits. However, it might also contribute to increased demand and competition in the housing market, potentially inflating property prices further.

The Green Property Revolution in the UK

An ongoing trend in 2023 is a shift towards sustainable housing in the UK. UK property market news was characterised by green building, modular construction and renewable energy sources, alongside government incentives offering new opportunities for growth and innovation in the property market.

• Green Building and Net-Zero Design
  The UK’s commitment to a net-zero strategy has resulted in significant investment in the green building sector. By the end of the decade, an estimated £90 billion is expected to be invested in this sector. Already, £26 billion has been committed since October 2021, creating numerous jobs and promoting low-carbon economic transition.
  Housing market predictions UK show the focus on green building is expected to enhance the quality and sustainability of new developments, making them more attractive to environmentally conscious buyers and investors.
• Modular Building
  PropertyMarket News UK highlighted how modular design is increasingly favoured in construction due to its efficiency and sustainability. Off-site construction reduces waste and emissions, and the global market for modular building is projected to reach $157 billion by the end of 2023.
  The popularity of modular buildings is likely to grow in the UK, offering innovative solutions for sustainable housing and commercial developments.
•  Ground Source Heat Pumps (GSHPs) and Geothermal Energy:
  GSHPs, which use geothermal energy for domestic heating, are gaining popularity in the UK. The impending ban on new gas boiler installations in 2025 is accelerating the shift towards these sustainable heating systems.
  The adoption of GSHPs is a significant step towards sustainable living. With an estimated 19 million geothermally-powered boilers to be installed by 2050, this trend is set to reshape the domestic heating market, aligning it with environmental goals.

Government Incentives and Regulations Promoting Greener Properties

•  Boiler Upgrade Scheme
  This scheme offers grants to property owners for installing low-carbon heating systems like heat pumps. It encourages the adoption of sustainable heating solutions, reducing carbon emissions and aligning with the UK’s climate targets.
• Home Upgrade Grant (HUG)
  HUG provides energy efficiency measures and low-carbon heating to low-income households. The government has allocated up to £630 million for this initiative.
• Social Housing Decarbonisation Fund
  The fund aims to upgrade social housing below EPC D standard. The government has allocated funding, with Wave 2.1 allocating £778 million for 2022 – 23 to 2024 – 25. Improving the energy efficiency of social housing reduces energy costs for tenants and contributes to environmental sustainability.
•  Energy Company Obligation (ECO):
  ECO requires energy suppliers to assist households with energy-saving measures to reduce heating costs. This obligation promotes energy efficiency in homes, reducing overall energy consumption and costs.
• Decline in House Prices
  The next trend in property market predictions forecasts a 4.7% fall in UK house prices in 2024, with an average home valued at £266,000 by year’s end (according to The Office for Budget Responsibility (OBR)). This decline is sensitive to interest rates and household income growth. It’s expected that it could take until 2027 for house prices to recover to their 2022 peak levels.
• Variation in Property Types
  First-time buyers looking for flats in 2024 might find discounts, especially in London. However, most London flats are leasehold and may not be as solid investments as houses. Flats are expected to experience more significant reductions in value than houses, which tend to hold their value better.
• Mortgage Rate Trends
  Next in the latest uk property news, despite a predicted drop in house prices, average mortgage rates are expected to remain high, around 5%, in 2027. This is due to current elevated interest rates affecting the stock of existing mortgages. Higher mortgage rates, which make borrowing more expensive, will impact property prices, leading to buyers being able to borrow less and offer less for properties.

Factors Shaping the UK Property Market in 2024

What are the key trends in the property market forecast UK? The following factors are expected to shape the UK property market for the next 12 months and beyond:

• Economic Downturn
  Higher interest rates and the economic downturn are expected to impact housing transactions and prices, possibly leading to further decline in house prices.
• Overvaluation of Housing Market
  Since 2010, house prices in the UK have risen by nearly 90%, largely due to ultra-low interest rates and quantitative easing. This has pushed house prices out of reach for many new buyers, with the house price-to-income ratio exceeding nine times income.
•  Rising Interest Rates
  The increase in interest rates has significantly affected mortgage costs, diminishing buying power and leading to falling demand. A household’s borrowing capacity has decreased markedly with the rise in mortgage rates from 2% to around 5%.

Should I Buy a House Now or Wait Until 2024 in the UK?

UK housing market predictions aren’t certain and the decision to buy a house now or wait until 2024 in the UK should be based on your personal financial situation, the current housing market, interest rates and long-term goals.
Waiting until 2024 might be advantageous if you’re working to save for a larger down payment, which can secure a better mortgage rate and reduce monthly payments. It can also help avoid private mortgage insurance required for down payments less than 20% of the home’s value. While housing prices and interest rates are fluctuating, waiting for more favourable market conditions could lead to savings and better mortgage deals.

How Much Will House Prices Drop in 2024 in the UK?

In 2024, house prices in the UK are expected to fall, with most experts predicting a drop between 5% and 10%. This decline is primarily attributed to the sharp rises in interest rates
since the end of 2021, which have reduced the affordability of mortgages and new house purchases. High interest rates are expected to continue dissuading buyers from borrowing large amounts of money, leading to a decrease in house prices.

UK property market news in 2023 was characterised by subdued sales, rising rental prices, legislative changes and a growing focus on sustainable housing. Looking forward to 2024, experts forecast a continuation of these trends with added complexities, such as an anticipated fall in house prices and the ongoing impact of economic conditions. For more property predictions, get in touch with our experts.