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UK Property Market Activity Stabilises at Around Pre-Pandemic Levels

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    Market Sensitive to Mortgage Rates But Buyer Confidence is on the Up

    Savills’ latest Housing Market Update, published this month, provides data and analysis on the current housing and rental market.

    The report has shown that house prices fell by -0.4 % in April compared to last month, but annual growth is still in positive territory, standing at 0.6%. Savills states that these fluctuations are due to sensitivity to mortgage interest rates in the current market. While the rates lowered in January and February, there has been an uptick recently. However, rates are still below the mid-2023 peak, which has positively impacted buyer confidence. Savills forecast that this will increase further once there is greater clarity over the first base rate cut after consecutive holds.

    Buyer demand has dipped, while supply has seen an uptick. In April’s RICS survey, the number of surveyors reporting higher demand decreased, while those who saw an increased supply have now reached the highest level since September 2020. This has somewhat eased the supply-demand imbalance, putting downward pressure on house prices. The annual change in house price growth still shows a strong north-south divide, with northern regions showing more resilience in the face of a challenging market.

    Further Reading: Are you looking for tips on how to buy a buy-to-let property? Read about this and other topics such as stamp duty for buy-to-let property with our investment guides.

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      Positive Outlook for UK Housing Market in 2024 & Beyond

      While short-term indicators show some dips in the housing market, Savills’ outlook for the year is positive, thanks to a stronger-than-anticipated start to 2024. Their latest forecast states that they expect UK house prices to grow by 2.5% on average this year. Some regions are projected to see even higher growth, such as the North West’s prediction of 4.0%.

      The updated forecast shows that Savills expects the housing market to recover further in the coming years. On average, the UK is predicted to see 21.6% growth in the five years to 2028. London house price predictions for the next 5 years show that the region with the lowest forecasted increase is London (14.2%), and the highest is the North West (28.8%).

      This healthy forecast is good news for investors hoping to buy investment property this year or in the near future.

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      Rental Growth Poised to Continue for Most Regions

      The average rental growth for the UK as a whole in March was 6.9% year-on-year, unchanged from February. The report reveals considerable differences in growth when looking at the regional breakdown.

      Strong annual growth was recorded in Scotland (9.6%) and northern regions such as the North West (8.5%). However, the East Midlands experienced a monthly fall of -0.1%, suggesting that prices may be approaching an affordability ceiling in this region, as we have seen in London.

      Savills’ rental forecasts indicate UK rental growth of 6.0% this year and 18.1% in the five years to 2028.

      To find out more about the UK property market, take a look at some of our buy-to-let area guides highlighting topics such as available investment property in Blackpool and available investment property in Doncaster.

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      Jessica Ferris

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      Jessica Ferris is a property writer at RWinvest, helping our readers stay ahead of property market trends with the latest news and statistics.