The increased number of reduced properties is very telling for one of the most subdued years in recent times.
Inflation rose significantly following the pandemic, the Ukraine crisis, and Liz Truss’s polemic mini-budget. In turn, the Bank of England raised interest rates 14 times in a row, settling at 5.25%. This sent mortgage rates sky-high, making a property more unaffordable than in previous years.
As a result, the property market slowed, with more people choosing to rent and fewer people preparing to risk purchasing a house.
While this seemed problematic initially, it was good news for buy-to-let investors who could purchase a property without a mortgage. Increased tenant demand and higher borrowing costs saw rental prices rise dramatically – with the average monthly figure rising by 9%. As such, the buy-to-let market has seen a substantial increase in gross yields throughout 2023.
Yet, while rent prices rose, property price growth slowed from the rapid growth seen throughout 2021 and 2022. As the data shows, many sellers looked to reduce their asking prices to attract a buyer in a hesitant market. This meant that buy-to-let property investors could potentially find bargain properties and enjoy higher rental yields.
Savills predicted that rents would continue to rise by 6% in 2024. In addition, the most recent Halifax House Price Index indicated that a slight price decline was likely over the next 12 months despite prices rising by 1.7% in 2023.
We can also expect sellers to reduce prices throughout January as they attempt to conjure a sale during the typically slow winter months. Therefore, property investors may be able to find bargain buy-to-let investment in the UK – particularly in traditionally good-value areas like the North West – in the opening months of 2024.
Find Out More: Understand the costs of buy-to-let and UK property investment with our rental income estimator.
