Savills Shows UK Property Market Is Regaining Its Footing
As a buy-to-let investor, you should always keep an eye out for signs of stability and promise in the UK property market.
According to the Savills UK Housing Market Update for December, the housing market is regaining its lustre, drawing on research from leading experts and organisations. If you’re interested in UK buy-to-rent investment, the latest facts and figures could bode well for your property investment strategy.
Let’s see what Savills had to say about the property market.
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Monthly House Price Figures Moving in the Right Direction
Savills kicks off its report with a look at the latest Nationwide House Price Index. The data shows a 0.2% rise in prices in November, which took the annual fall to -2.0%, much better than predicted at the start of the year. In addition, a revision to the September HPI figures indicates that prices have risen for three months in a row.
Alongside lower mortgage rates – the current five-year fixed rate average is 5.11%, according to Rightmove – the Savills report hints at greater stability within the UK property market. As mortgage rates come down, buyer demand gradually increases, leading to the slight growth shown in Nationwide’s latest figures.
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How Has the Wider Economic Backdrop Helped the UK Housing Market?
The UK economy continues to recover following a pandemic, global economic events and the Liz Truss mini-budget.
Inflation fell to 4.6% in October, the lowest rate in two years per ONS data. As such, economists are increasingly confident that the Base Rate has peaked at 5.25%, which will continue affecting mortgage rates moving forward. That being said, it will take some time for interest rates to come down, with the Bank of England stressing caution with the national economy.
Continued low activity and property price decline should be expected for the time being. A RICS survey showed decreasing demand in October, which is currently lower than supply, prompting sellers to lower asking prices to achieve a sale.
The UK home supply returned to pre-pandemic levels in the latter months of 2023. The number of properties for sale in November was 34% more than the previous year, per Zoopla.
With mortgage approvals increasing slightly in October, we have seen increased asking price discounts. Zoopla said the average discount was 5.5% in November, up from 3.4% in the first half of 2023.
This may be good for property investors looking to get into the market at the moment, as the supply and demand imbalance in the buyer’s market means bargain property investments are available. However, as the market continues its march towards stability, expect those prices to go up sooner rather than later.
If you are interested in buy-to-let investment, check out our guide on how to get into property investment.
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What About Rental Growth in the UK Housing Market?
Savills Housing Market Update also mentions Zoopla’s rental growth report. According to data, rental growth sat at 9.7%, remaining high despite the current cost-of-living crisis and accelerating in various regions on a yearly basis. The North West recorded the best rental growth rate (11%) in the latest Goodlord Rental Index, emphasising the region’s appeal to buy-to-let investors who want to keep the costs of buy-to-let low and ROI high. As such, an investment in a desirable area in cities like Liverpool or Manchester could be one of the safest investments in the UK for gross rental yield.
Considering regional property investment? We have many guides available to give you an idea about the best buy-to-let areas. These include: