United Kingdom

Housing market update January 2024 – a quiet year ahead?

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After last year’s predictions of a housing market crash didn’t come true, analysts are forecasting flatter sales and rentals in 2024.

  • Rental growth could slow down in 2024, warn analysts. Rightmove reports that advertised rents rose by 6% in London and 10% in the rest of the UK last year, but only forecasts 3% and 5% respectively for 2024. Meanwhile, Zoopla forecasts rents to rise 5% in 2024, while Savills predicts 6%.
  • The Office for National Statistics reports that rents rose 6.2% year on year in December 2023. Unlike most private sector measures, the ONS includes existing as well as new tenancies in its data.
  • Rightmove also reports that more landlords were reducing advertised rents to secure tenants towards the end of last year. At the end of 2023, 23% of rental properties saw at least one reduction, compared to 16% at the same time in 2022.
  • HomeLet reports that rents actually fell in December – by 2.2% in Greater London and 0.9% elsewhere. Despite that, they also found that rents rose 8% last year.
  • House prices fell by between 1% and 2% last year, according to reports from Halifax, Nationwide, Zoopla and the Land Registry.
  • Analysts are also quite closely aligned on their predictions for this year. Zoopla expects a 2% fall, Rightmove says prices will fall 1%, Nationwide forecasts a range between a 0% and 2% drop, while Halifax predicts a 2% to 4% fall.
  • Investors may want to take these predictions with a grain of salt. Most forecasters expected larger price falls in 2023 than actually happened, such as Halifax’s prediction of an 8% crash. Rightmove and Chestertons were closest to the mark last year.
  • The Bank of England is expected to start cutting interest rates this year, reducing the cost of borrowing and potentially boosting sales activity. Commercial lenders are already offering more competitive rates.
  • However, a shock rise in inflation in December could delay the forecast interest rate cuts. The ongoing crisis in the Red Sea, which wouldn’t have been reflected in the December inflation figures, could put more upward pressure on prices.
  • While growth is set to slow down this year, the ongoing shortage of housing stock to buy and rent is likely to ensure growth in the medium to long term. The Home Builders Federation (HBF) reports that 198,121 homes were granted planning permission in the first nine months of 2023, 18% below the same period in the previous year. The HBF predicts that housebuilding will fall to its lowest level in a decade this year.
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