Cluttons suggests that overseas and cash buyers will be prominent in the London rental market in the future, with dollar-based investors likely to take advantage of the relative weakness of the GBP.
Sustained cuts to mortgage rates are also expected to underpin demand in 2024, with overseas investors potentially being encouraged to take action before the General Election.
With the Labour Party pledging to increase Stamp Duty rates for non-residents by a further 2%, this could be an incentivising factor to get involved before any potentially new legalisations take effect.
As mentioned, this forecast predicts that London values will remain unchanged this year, with prices expected to gain momentum in 2025 and rise by 3.5%.
According to the report, this analysis is informed by increased optimism surrounding the UK housing market following the Bank of England’s decision to halt interest rate rises in Summer 2023 and the subsequent drop in mortgage rates from lenders. Why not read about how to make money from Property? with our free guide.
Cluttons also anticipates thriving activity in the central London rental market, where demand is still outpacing supply. However, they also expect rental increases to slow to 2.5% in 2024 – down from double-digit growth in 2022.
Gráinne Gilmore, Director of Research & Insight at Cluttons, said: “The economic and political landscape includes much uncertainty as we move into 2024, both globally and domestically. A UK General Election at some point this year will create uncertainty in the months leading up to the vote.
“Yet it also provides an impetus for policymakers to implement or promise policy changes that could help more first-time buyers onto the ladder, to streamline property taxes and to overhaul the planning system to help get more homes built, all of which could provide a fillip to the market.
“However, any intensification of the crisis in the Red Sea could contribute to rising inflation as the cost of delivering goods increases, which would, in turn, affect sentiment if the Bank of England can’t cut rates as quickly as expected. Likewise, any sudden rise in unemployment would act as a brake on the housing market.”
Further Reading: For more information, take a look at our UK interest rates chart and our guide to London rental yields.
