26 Dec 2024

2024 Property Market Roundup

Category: Market Updates

As we approach the end of 2024, it’s clear that this year has been defined by both challenges and remarkable opportunities within the property market. Despite periods of uncertainty and significant shifts, the market has demonstrated impressive resilience, with strong upward momentum in many regions.

Before heading into 2025, let’s reflect on the key trends and changes that have shaped the 2024 property market...

Author: Sophie Hope

Digital Marketing Executive

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A Challenging Start

Q1 2024

The UK 2024 property market started with notable momentum, as property prices saw an impressive rise of over £6,000 in the first quarter, recovering from a relatively slow end to 2023. This early growth indicated an upward interest in the housing market, driven by high demand and continued low housing supply.

The rental market also experienced a significant uptick, with the average UK rent surging to £1,220. This rental price growth offers investors a strong opportunity to secure solid, rising returns.

However, the Bank of England’s base rate, which sat at a 16-year high of 5.25%, led to higher borrowing costs. Mortgage lenders increased rates, which for investors, meant it was harder to secure an affordable BTL mortgage.

On top of these existing challenges, the Spring Budget in March introduced new legislation that took many by surprise. These legislation changes significantly impacted investor strategies, particularly in the buy-to-let market.

The Future Was Looking Bright

Q2 2024

In Q2, average rental yields climbed from 4.75% to a solid 5.8%, signalling a significant increase in average rental incomes for landlords. This rise in yields is a result of continued strong demand for rental properties. This positive trend in rental income comes alongside a dip in the UK’s inflation rate.

The inflation rate fell to its lowest level in three years, dropping to 2.3%. As inflation eased, the pressure on the cost of living and expenses for landlords decreased, creating a more favourable economic outlook for investors.

The reduction in inflation also led to a decrease in mortgage rates, which nearly reached their lowest point since the start of the rate rises. By the end of Q2, the average mortgage rate had fallen to 5.55%, offering investors more attractive financing conditions.

This shift in the mortgage landscape, combined with rising rental yields, created a more stable investment market, where both rental returns and financing costs were moving in a favourable direction.

Landlords Profits are Rising

Q3 2024

A study highlighted that 87% of landlords were profitable in Q3 2024, with their earnings rising by 7% compared to the same period in the previous year. This growth shows the ongoing strength in the buy-to-let market. The increased profitability provided favourable market conditions for landlords, driven by both rental income growth and stable property prices.

At the same time, the political landscape shifted, as the Labour Party won the election. This triggered speculation about potential changes to housing policies. Investors had to closely monitor updates, as any new legislation such as tax rules, tenant protections, and buy-to-let market dynamics, could affect them.

The Bank of England reduced the base rate to 5% in response to easing inflationary pressures. This had a positive impact on mortgage rates, with the average five-year fixed mortgage rate falling to 4.80%.

Market Confidence Picks Up

Q4 2024

In the final quarter of 2024, the Bank of England reduced the base rate to 4.75%, signalling a significant shift in the financial environment. This reduction in interest rates could provide relief to lenders as it may lead to lower borrowing costs. Making financing more accessible and potentially driving competition in the housing market.

However, this shift was overshadowed by the uncertainty around the Autumn Budget, which introduced new policies and strategies that raised concerns among investors. The government’s proposals, especially around taxes, housing supply, and regulatory changes, left many questioning the impact on the property market.

Despite this uncertainty, the UK property market showed remarkable resilience. Property prices reached a record high, with the average price now standing at £298,083. Additionally, agreed sales in Q4 surged by 26% compared to the same period in 2023, suggesting a strong increase in market activity. Buyer demand also rose by 25%, signalling heightened confidence among buyers and investors as we head into 2025.

Property
Market Overview

As the UK 2024 property market adapted to changing base rates, new regulations, and rising house prices, there were periods of uncertainty. However, despite these challenges, the market proved resilient throughout 2024.

Key factors such as stronger income growth and a reduction in mortgage rates played a crucial role in improving affordability for both buyers and investors. These adjustments allowed the market to regain momentum, with lower borrowing costs creating more favourable conditions.

Looking ahead, 2025 is expected to see a significant uplift in market activity, now that the property market has adjusted to the evolving economic landscape. Investors can expect even greater opportunities in the UK property market. For those looking to capitalise on long-term growth, 2025 offers the potential for substantial returns as the market continues to expand.