Property Market Update | January 2024
2024 is upon us already, and the property market is already making a strong start in January. Both the rental and sales markets are thriving as the year begins, and landlords and homeowners alike look set to benefit. So, what's happening in the UK property market? Read on to find out.
A Rise In Monthly Average Rents
Since January 2023, there has been an increase of 9% in the average monthly rent. This has added approximately £1200 to a typical annual bill over the course of the past 12 months. It looks as if the start of 2024 is still going to be difficult for tenants, who now have to find the equivalent of a month's average rent on top of their previous annual bill. On the other hand, this is good news for landlords, who are enjoying good profits from their investments.
The average monthly rent nationwide as we enter 2024 is now £1200, with almost double that amount being typical in the capital. It's worth noting, though, that rental growth is predicted to start slowing down as the months go on since worsening affordability is likely to keep the demand under control. Some markets are already showing some resistance to high rents, so landlords should keep this in mind when considering any further price hikes.
House Price Increases Since December
Homeowners looking to put their properties on the market this January could benefit from house price increases. There have been predictions of 3% increases over those from the end of last year, as the prospect of potential cuts in the interest rate alongside more affordable mortgages are likely to result in more transactions taking place.
After 2023 saw sustained falls in house prices, it was forecast before the year end that 2024 would experience a further drop of 4%. However that now appears to have been a premature estimate. An increase in the number of mortgage approvals being received over recent months is now believed to translate into a minimum increase of 10% in transactions over this year.
Since December, new sellers' asking prices have increased by approximately £4571, which represents the largest growth for this time of the year since pre-Covid times. Although overall prices are still 0.7% lower than those from a year ago, experts say that this year's start looks quite promising as buyer demand is growing, and 15% more properties are coming onto the market. According to Rightmove, the beginning of the month saw a fifth more sales being agreed than this time in 2023 which indicates buyer confidence is returning.
Forecasters have also predicted that house prices are unlikely to drop significantly before the end of the year, with a decrease of only around 1% nationally being expected by December 2024 thanks to an underlying strong level of buyer demand.
Competitive Pricing Crucial For January Sellers
Although the increase in asking prices is good news for January sellers, it's important to bear in mind that competitive pricing will be crucial when it comes to finding a buyer. Even though the month so far has seen growth in buyer activity, the amount of properties being listed on the market is still outpacing the number of purchasers making enquiries. That means realistic and accurate pricing for the local area lies at the heart of securing a sale, and sellers should resist the urge to over-optimistically price their UK property.
Cheaper Mortgage Deals
Although Howard Davies, chair of NatWest sparked criticism with his statement earlier this month that it wasn't 'that difficult' to get onto the property ladder, buying a home will still be unaffordable for a significant number of prospective purchasers in 2024. Yet there is some promising news on this front.
Mortgage deals are already becoming a little cheaper, with 5-year fixed-rate mortgages now averaging at 4.86%, down from a peak of 6.11% last July. Rates are also expected to reduce further in the weeks and months ahead, with the best deals now coming in under 4%. It has been predicted that borrowing costs will be cut by the central bank from its existing 5.25% rate to under 4% by this time in 2025, and that should reduce the cost significantly of taking a mortgage out.
Mortgage Time Bomb Potentially On The Horizon
Although those taking out a new mortgage may benefit from reduced costs, a mortgage time bomb could potentially be on the horizon for the millions of UK property owners who are coming to the end of their cheaper deals. Around 1.5 million homeowners will face a considerable increase in the amount they have to repay every month, and that could mean an average family having to find an extra £1800 a year to cover their housing costs.
A Strong Start To The Year
With growth in the market thanks to more affordable mortgage deals and an increase in UK property prices, 2024 is getting off to a buoyant start this January. As we head towards Spring, it will be interesting to see just how well the experts' predictions pan out, and whether February will be an equally positive month for landlords and sellers alike.
What Next?
We are delighted to bring you our property market updates each month. If you are thinking of buying or selling a property in Sevenoaks please get in touch with the team at Maison Partnership on 0333 242 3292 or email concierge@maisonpartnership.com.
