2023 was a turbulent time for the UK property market. Following a pandemic, crises in Europe and the Liz Truss/Kwasi Kwarteng mini-budget, increased inflation and interest rates affected mortgage and house prices.
However, a price drop was to be expected following the period of huge buyer activity following the COVID-19 pandemic. The subsequent inactivity and price stagnation made prices more manageable after a significant property value increase in 2022.
Savills points to this turbulence – as well as build cost inflation and regulation changes – as the reason for suppressed activity in the residential sector over the last 12 months.
However, inflation fell to 3.9% by the end of 2023. While it still has some way to reach the Bank of England’s 2% target, Savills expect more stability in the homebuyer and buy-to-let markets moving forward.
Increased tenant demand is a side effect of such a turbulent year in the housing market. This led to increased rental prices across the country. Savills predicts rent prices will grow 18.1% over the next five years. As such, buy-to-let investors who are less reliant on mortgages stand to make a considerable return on their investment.
Savills’ cross-sector UK forecast suggests that property investors with portfolios away from the capital stand to make significant profits. In fact, Savills predicted a 9.2% return in the North West over the next 12 months.
Expand your buy-to-let knowledge: Interested in discovering more about the UK buy-to-let scene in other parts of the country? Check out our Middlesbrough buy-to-let and Exeter buy-to-let area guides.