The previous year was tumultuous as far as the buy-to-let property market in the UK is concerned. However, the latter half of 2023, saw the conditions starting to get favourable as mortgage rates and property prices dropped to a more affordable range. It is safe to say that majority of 2023 favoured the sellers but that is set to change in 2024. We have highlighted some key points which indicate that this year will be a buyer’s attraction even if you are an existing landlord or plan to be one.
Mortgage Rate Recovery
While it is almost certain that the period of extremely low mortgage rates is not going to return anytime soon, this new year still offers a good deal of optimism for buyers. The mortgage rates currently stand at between 4-5% which in itself is historically low. This may continue to drop throughout 2024 as the Bank of England maintained the base rate at 5.25%. The drop may reach a maximum of 100bp points in 2024.
Lower House Prices
Good news for investors as housing prices in UK are expected to fall by 2-4% according to Halifax. Top property advisor Savills also predicts that housing prices in the UK are expected to fall by at least 3%. The Office for Budget Responsibility says that the recovery of prices to peak 2022 levels may take until 2027.
As the uncertainty about housing prices continue to linger, sellers are going to offer more discounts to recover and prevent further losses. This gives the buyer an edge while negotiating and boosts the chances of getting a good deal. The falling prices and high seller discounts provide an optimal environment for someone to enter property investment or an existing landlord to expand their portfolio.
High Buying Demand
According to Zoopla, by the end of 2023, the demand in the market grew by 19%. Investors started to grow more optimistic as the mortgage rates dropped and the prediction of declining house prices. This trend of growing optimism in the market may well be visible throughout 2024.
There are still concerns over the actual affordability of properties, the increased demand will act as a catalyst for increased buyer competition. It is therefore best to enter the market early while the competition is less.
The Emergence Of A Buyer's Market
2024 is a buyer’s market, with an opportunity that has not and will not be seen in a very long time, which offers buyers the chance to secure excellent value at the beginning of a market on the upturn with lots of growth to recover from.
The year will offer a generational opportunity for buyers to capitalise on an economy that is showing many indications of nearing the end of its most turbulent period in decades. Inflation has halved since this time last year and it is expected to do so again in the upcoming year; hitting the 2% target looks promising as a result.
Over the past 70 years, there has been a strong trend of growth in the UK property market. Following this course, it can be assumed that the growth that has been lost in the previous years will need to be recouped in the medium to long term. With the prediction of falling mortgage rates and property prices over the coming year, profiting from the capital appreciation that could be seen in the years beyond 2024 is an opportunity that buyers should take advantage of.
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