Will the UK Housing Market See a Spring Bounce in 2024?

According to the Knight Frank Intelligence Lab, the UK housing market outlook is positive, buoyed by falling mortgage rates, lower inflation and higher rents.

With more landlords ready to take a chance in the market, there is a higher likelihood that we will see a seasonal spring bounce in the early months of 2024.

Read on for more information.

Following the disastrous mini-budget of 2022 that sent the pound crashing and caused widespread economic turmoil across the country, many forecasters predicted catastrophe in the housing market.

However, recent indices have shown that the market performed remarkably well compared to the doom and gloom at the end of 2022.

The most recent Rightmove House Price Index showed that UK property asking prices only fell by 1.3% year-on-year. Some forecasts feared a double-digit drop during 2023. This is a testament to the remarkable durability of the UK housing market.

Over the last year, the market adjusted to a demanding economic climate fraught with high inflation, mortgage rates and the Ukrainian crisis. The sector has withstood the onslaught, though these factors led to subdued transaction levels across most of the country as buyers wait for more stability in the financial landscape.

However, Knight Frank revealed numerous factors that could lead to a positive push in the UK market. While people can only predict how the market will go, it is becoming increasingly likely that 2024 will offer more opportunities for property investors than its predecessor. Why not read about how buy to let works or how to look for real estate and where to invest in 2023.

Data points to mortgage rates as one of the leading factors that could contribute to renewed affordability in the housing market. Mortgage rates have fallen over the past couple of months. Currently, mortgage lenders are dropping rates to remain competitive among their peers, which makes all the difference to buy-to-let investors taking out a new mortgage in the next few months.

So, why are mortgages going down?

Mortgages rose in the face of high interest rates. The Bank of England raised rates 14 times in a row until they stopped at 5.25%. This was an attempt to temper inflation, which had grown out of control following the COVID-19 pandemic, the Ukraine-Russia conflict, and Kwasi Kwarteng’s horrendous mini-budget misstep in 2022.

While the Bank of England does not intend to reduce interest rates any time soon, mortgage lenders look to falling inflation and a stable interest rate as a good enough reason to trust the property market. Property investors should expect those mortgage rates to fall further if there are no unforeseen hiccups in the UK economy.

Mortgage rates hovered around 6% across most lenders in early 2023. However, they are now closer to 5%, making all the difference regarding confidence in the housing market. For the latest house price news read the latest RWinvest news articles, or if you are looking for a new build buy to let property, look no further.

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Head of Knight Frank Finance, Simon Gammon, said the following about mortgage rate drops in the Knight Frank UK Housing Market Report.

‘The recent rate drops show lenders are feeling more positive about the outlook, and there is an impact beyond the cut. Lower rates mean lenders have more opportunities to help borrowers, which itself will lead to a more liquid and competitive lending market.’

Historically, mortgage rates have been the main drivers of housing market activity growth, suggesting that a seasonal bounce in the spring of 2024 is likely. If you are looking at building a property portfolio, now is as good a time as any!