As we bid farewell to 2023, reflecting on a year marked by the highest mortgage rates in 15 years, declining house prices, and a dip in property transactions, it’s crucial to recognise the resilience of portfolio landlords who steadfastly held onto their buy-to-let properties. The market experienced a rollercoaster ride, but optimism emerged as the Bank of England maintained the base rate. As we approach the new year, let’s explore why investing in property in 2024 is a strategic move to build wealth, seizing the opportunities within a buyer’s market.
Projected Rise in Property Prices
While property prices exhibited monthly fluctuations throughout the year, there was an overall year-on-year decline. Rightmove predicts a further 1% drop in prices in 2024. While this may be challenging for existing landlords, it presents a golden opportunity for investors looking to enter or expand their portfolios. Zoopla notes that current market conditions favour buyers akin to those in 2018. Moreover, Savills forecasts a substantial 17.9% growth in property prices by 2028, making 2024 an opportune time for investors to benefit from capital appreciation.
Current Property Price Discounts
The downward trend in house prices coincides with an increase in seller discounts. Between November and December, property discounts reached a 5-year high, averaging 5.5%, or £18,000 off the original asking price. This buyer-friendly environment has spurred a 6% increase in demand. Investors are advised to act promptly to capitalise on these discounts, as heightened competition among buyers continues to drive demand.
Improvements in Interest Rates
Following 14 consecutive hikes, the Bank of England opted to maintain interest rates at 5.25% in September, repeating this decision in both November and December. This led to a reduction in interest rates by lenders, introducing a wave of sub-5% mortgage products. Analysts anticipate a further decrease, with sub-4% products likely in the first half of 2024. This positive shift, compared to the 15-year peak in July 2023, positions 2024 as an excellent year to secure a competitive rate for buy-to-let purchases. The combination of competitive mortgage rates and declining property prices extends the reach of investors’ capital, enhancing access to superior properties and potential high returns.
Increased Availability of Properties
Contrary to the competitive landscape during the pandemic, the property market now boasts a healthier supply, with the number of listed properties reaching a 6-year high. Property sales have surged by 15% since 2022, offering new investors a diverse selection. The abundance of three and four-bedroom properties, experiencing the largest market surge, opens avenues for portfolio diversification, especially in potential House in Multiple Occupation (HMO) properties. The expanded property pool in 2024 provides investors with ample choices to align their investment goals with the right property.
Continued Growth in Rental Demand
According to the National Residential Landlords Association (NRLA), independent research reveals a significant 71% of landlords reported increased rental demand in 2023, nearly tripling since 2019. The West Midlands, with a remarkable 76% of landlords witnessing heightened tenant demand, stands out. This growing demand instils confidence in investors, assuring them of accessible, high returns. Regional cities, such as Birmingham in the West Midlands, emerge as strategic locations for buy-to-let investments, offering a balance of lower property prices and robust rental demand.
In summary, the stability returning to the property market in late 2023 is poised to extend into 2024, marking it as a buyer’s market. With decreasing property prices, improving mortgage rates, escalating rental demand, and an increase in available properties, investors can confidently embark on a new buy-to-let venture in the upcoming year. The anticipated capital appreciation of 17.9% by 2028 further underscores the advantages of entering the market in 2024 to harness forecasted capital growth.
If you’re looking to grow your wealth through buy-to-let investment in 2024, with Galaxy of Homes you can find, finance, and manage your property investments, all in one place.
To learn more before you get started, register for our upcoming webinar.
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