JLL points out that the Nationwide, ONS and Halifax House Price Indices show little change in UK property prices over the last year. ONS showed the most significant decline in property prices at -2.1%, while Halifax showed an increase in prices at +1.7%. This sharply contrasted with the consensus at the start of 2023, when forecasters expected prices to fall by around 6%.
However, an RICS survey saw respondents report a consistent price decline every month from November 2022. While Q3 2023 was the most negative quarter of the year, the December figures were the best since November 2022.
This implies that the market might be turning, but it also suggests that the current figures may only partially capture the slowdown in the market during the second half of 2023. The Office for National Statistics (ONS) data includes deals agreed upon months before, and the time between making an offer and completing a transaction often exceeds four months.
As a result, the prices achieved until spring will predominantly reflect deals made in 2023 when costs of buy-to-let were higher and sentiment was weaker. This means that even if the market appears more active and we observe an increase in activity and prices, the figures may take some time to align.
JLL predicts a 3% decline in UK house prices in 2024. Factors such as an early election, incentives in the spring budget to stimulate activity, or an earlier series of rate cuts by the Bank of England could make that outlook seem more negative.
However, until more information is available, JLL assumes that base rates will have decreased by the summer, leading to increased activity. If the UK property market follows this trajectory, it is more likely that we will see price rises in the second half of the year, but it might not be until 2025 that we observe these changes reflected in the indices.
For that reason, buy-to-let investors may find good-value properties available for cheaper than they usually would be over the next 12 months.
Further Reading: If you are considering investing in off-plan property, check out our article on investment property advice or review some of the Cardiff investment property opportunities.