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10 Nov, 2023

Good-Value Property Prices to Remain Until 2025

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    JLL Predicts UK House Price Rise in 2025

    Property prices are expected to fall by 6% by the end of 2023. In 2024, they are forecasted to drop by another 3% in 2024. 

    For property investors, this could be an excellent time to take advantage of below-market prices before they increase in the next couple of years.

    These figures come from the latest research by real estate group JLL.

    Read on to see how this affects residential buy-to-let investment properties & sales going forward.

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    How Does the UK Housing Market Compare to Previous Price Drops

    While property prices will drop over the next year, JLL indicated that the housing market was more “resilient than expected” despite rising interest rates and inflation issues underpinning the cost-of-living crisis.

    Research shows that the price falls will be less severe than during the 2008 global financial crisis.

    Stronger lending rules and higher equity have helped protect the housing market post-2008, ensuring property investment remains one of the more reliable ways to grow capital.

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    When Will UK Property Prices Rise?

    As mentioned, JLL predicts that UK house prices will continue to fall through 2024. 

    However, wages are now rising faster than inflation. In addition, the interest rate has been held twice in a row, suggesting the UK economy is more stable than it has been all year.

    With interest rates holding and inflation dropping over the last few months, mortgage rates should start coming down as well, leading to an increase in activity in the housing market and pushing up prices for buy-to-let investors.

    Property investors may want to add to their portfolio now before housing gets more expensive when market growth recovers.

    According to JLL, prices will rise again in 2025.

    The report states: “We are forecasting a return to growth in our 2025 forecast as fixed rates begin to fall and we have more certainty on the outlook.”

    You can learn more about UK interest rates history with our expansive overview.

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      The UK Housing Market Supply and Demand Imbalance Is Good for Rental Yields

      The JLL report also points to the need for more homes for sale in the market.

      They said: “JLL predicts that this undersupply will worsen further, with a cumulative shortfall of 720,000 homes between 2023 and 2028.”

      The lack of supply is one of the main reasons rents are on the rise.

      According to the Homelet Rental Index, the average UK property price is £1,283 – 9.56% higher than the same point last year.

      JLL expects further rental cost spikes over the next few years, stating that the “imbalance between rental stock and tenant demand drove rental growth to double-digit highs in 2023.

      “Over the next five years, we expect the lack of new rental stock – through fewer new home completions and a more challenging interest rate environment, will mean we see rental growth exceed wage growth.”

      The group expects a rental growth of 5% in 2024.

      For those investing in property, this means higher rental yields for the next couple of years.

      With house prices down and rental costs up, landlords are seeing higher gross rental yields on their properties, especially in regions like the North West, where property prices are well below the national average and rental costs fall in line with the rest of the country.

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        Are There Any Other Signs the UK Housing Market Is Moving in the Right Direction?

        While JLL predicts further price drops between now and 2024, the Nationwide UK House Price Index showed the market is defying expectations with the largest monthly price increase in over a year.

        According to those figures, property prices rose by 0.9% in October. However, they were 3.3% lower than a year prior.

        The index showed that UK house values increased in price to £259,423.

        While Nationwide admitted prices would remain subdued, this monthly increase suggests that there has been an increase in activity in the property market.

        The JLL Residential Forecast also points to these figures as an indicator that the market is not as bad as previous price falls.

        They said: “Thirteen months on from summer 2022 peak, house prices are down by 5.3 per cent according to figures from Nationwide. This compares to a fall of more than 13 per cent at the same point following the 2007 peak.”

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        Dale Barham

        Dale is a property content writer at RWinvest. Keeping a close eye on the UK property market, Dale helps our readers stay informed and up to date on the latest market news and statistics.

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