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UK Housing Market Prices Expected to Rise by 3% in 2024

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    UK House Prices Could Rise by 3% This Year

    The UK housing market has got off to a confident start in the early weeks of 2024. For instance, buy-to-let investors have expressed confidence in their business prospects over the next year. In addition, the latest Halifax House Price Index showed that house prices defied expectations and rose by 1.7% over the last year.

    Previously, forecasters predicted that house prices would fall in 2024 as more buyers contended with high mortgage rates. However, Knight Frank has said they expect the average property price to rise during the next 12 months.

    Let’s look at what this means for buy-to-let investors and the property market in more detail.

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      How Much Could House Prices Go Up in 2024?

      In the face of falling inflation rates and changing interest rate expectations, Knight Frank’s head of UK residential research, Tom Bill, expects property prices to grow by 3%. According to him:

      “In October, financial markets were pricing in a single interest rate cut of 0.25% by the end of 2024. By the end of last week, they were expecting five.

      “The main reason for this changing outlook is that inflation is falling faster than expected. As a result, mortgage lenders have dropped their rates fairly significantly in recent weeks, partly to win business in a low-volume market.

      “The best five-year fixed-rate mortgage is now under 4%, which was made possible after the five-year swap rate fell a full percentage point over the final quarter of 2023.

      “Data from Halifax and Nationwide certainly suggests a corner is being turned. While the former reported a 1.7% increase in 2023 and the latter posted a fall of 1.8%, that compares to a 5% decline that both identified in August.”

      However, property growth in the London market is expected to be less than the national average, only reaching 2% due to the continued cost of living constraints. Those affordability issues may push buy-to-let investors to consider property purchases further afield.

      Savills recently revealed that the North West buy-to-let market would see returns of 9.2% in 2024, which may tempt southern landlords to invest in the northern housing market in search of the best property investment opportunities.

      Knight Frank also said property growth should reach 20.5% between now and 2028 – a marked improvement from previous forecasts.

      Read more: If you’re looking for information on how to make money from property, read our guide on how to build a property portfolio.

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      Could Anything Affect This Property Market Prediction?

      According to the Knight Frank analysis, one of the main factors that could affect the property market this year is the upcoming General Election.

      Knight Frank’s Tom Bill said:

      “There is a risk that Rishi Sunak can’t fully control the timing if ideological splits within his own party on the issue of immigration grow wider, which adds an element of uncertainty. Speculation over the stability of the government is not good for sentiment in the housing market, as we saw in 2019 under former PM Theresa May.

      “On the plus side, activity could be boosted further by pre-election giveaways in the March Budget. Check out the latest buy-to-let loopholes and other property news with our free guides.

      “There is speculation surrounding tax cuts as well as measures to help first-time buyers, including longer fixed-term mortgages, smaller deposits, and a revived help-to-buy scheme.”

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        What Does All This Mean for Buy-to-Let Investors?

        While General Election years are usually subdued as property investors wait to see what happens, the fact that Knight Frank is confident in property prices rising over the next twelve months proves that conditions are good enough to tempt many buyers and sellers into the market.

        With inflation coming down to 3.9% and multiple interest rate cuts expected, mortgage rates should also come down further, increasing activity in the market and pushing property prices up in the process.

        However, with prices expected to grow, buy-to-let investors must identify rental hotspots across the UK and find properties that offer excellent value and significant return on investment.

        As mentioned, the North West buy-to-let market is predicted to enjoy strong returns over the next year. Property investors – whether investing in off-plan property or purchasing second-hand homes – may want to consider properties to buy in Liverpool and Manchester to find areas that are desired by tenants while still benefitting from solid capital growth potential and high gross yields.

        Find out about buy-to-let investment in different cities in the UK with some of our helpful guides.

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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.