UK Property Market Poised for 2024 Rebound

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Has the Market Turned a Corner?

Official figures suggest that the housing market will bounce back in 2024.

Last year, the average UK house prices dropped by £4,000, marking a 1.4% decrease in the 12 months leading to December 2023. According to the Office for National Statistics, this is an improvement from the 2.3% decline reported in November.

Let’s look at those figures in more detail and see what they mean for UK buy-to-let property.

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What Does the UK Property Market Outlook Look Like for 2024?

The ONS data indicates that the slowdown in the housing sector triggered by higher mortgage costs in 2023 might be ending, and the downward trend in house prices has likely reached its lowest point.

Despite a significant increase of over 20% in house prices since 2020, adding more than £60,000 to the average UK house price, the latest figures show an annual decrease of £4,000, bringing the average cost to £285,000 in December. Prices had peaked at £291,100 in autumn 2022.

Economists anticipate that demand from cash buyers and first-time buyers, who now have access to much cheaper mortgages compared to 2023, will drive prices back towards their peak this year. This renewed level of affordability should also tempt more investors into buying investment property in the buy-to-let market, especially when you consider that the North West buy-to-let sector is expected to see returns of 9.2% this year (according to Savills), while rental growth is predicted to reach around 6%.

Forecasts suggest that the Bank of England will reduce interest rates from 5.25% to 4.5% this year, leading lenders to lower their latest fixed-rate mortgage offers.

Halifax and Nationwide’s data show prices rebounding since the beginning of the year as mortgage loan costs decline. Knight Frank, amid renewed confidence in the property market, cautiously revised their 2024 forecast, expecting property prices to increase by 3% over the next 12 months.

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How Did Property Prices Move in Different Regions in the UK?

In 2023, England experienced a significant fall in average prices, down by 2.1% to £302,000. Wales also saw a decline of 2.5%. However, Scotland witnessed a rise in prices by 3.3% to £190,000, narrowing the price gap across the UK.

The north-west of England had the highest annual percentage change in 2023, increasing by 1.2%, while London investment property saw the lowest, at -4.8%.

Though house prices declined in 2023, private rents increased further. Before the pandemic, rental inflation averaged 1.5% in the two years leading up to March 2020. Since then, rental costs have grown yearly, stabilising at 6% over the last four months of 2023.

According to the ONS: “Private rental prices paid by tenants in the UK rose by 6.2% in the 12 months to January 2024, unchanged for the second consecutive month.

“Within England, London had the highest annual percentage change in private rental prices in the 12 months to January 2024, at 6.9%, while the north-east saw the lowest, at 4.7%.”

Explore the UK property market in greater detail with our 2024 buy-to-let area guides:

UK Property Market Poised for 2024 Rebound