Yahoo Finance 9 expert predictions on UK house prices, mortgages and renting
Whether you’re a tenant, landlord or homeowner, 2023 was a turbulent year across the board, with rising rents and mortgages coupled with falling house prices.
To establish if 2024 will be as much of a rollercoaster as its predecessor, we asked five property experts what their predictions for the next 12 months looked like and here’s what they said.
1. Rents to go up… but not as quickly
Tenants reeling from the massive 9.4% increase in rents on new lets last year are doubtless hopeful that 2024 looks very different.
Aneisha Beveridge, head of research at Hamptons, says that, while there will be an increase in the next 12 months, it’s likely to be a little slower than what we’ve become accustomed to. So, while it’s not great news, it’s not terrible either.
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“We expect rents to continue rising in 2024, probably by around 7%. This growth will continue to be buoyed by a lack of homes available to rent combined with higher landlord costs — particularly as more investors roll off cheaper fixed-rate deals to find themselves remortgaging at higher rates,” she said.
2. Cost will drive tenants out of cities
As a result of these increasing rents, Sarah Walker, founder of Lessons in Lettings, predicts that those renting in larger cities will decide to up sticks and leave.
“With the ever-increasing costs in living, it’s my prediction that many tenants will simply leave the larger cities altogether due to basic financial commitments of rent, bills and groceries leaving them with nothing left in the piggybank to go out and enjoy themselves and all that their surroundings have to offer.”
3. Some 25% of landlords will sell up by August
It seems that landlords are just as fed up with the housing market as their tenants.
A recent report by estate agents Lordsons revealed that 25% of landlords had expressed the intention of selling their properties by August 2024.
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“Factors such as soaring mortgage rates, diminishing returns on investments, and changes in capital gains tax allowance contribute to this trend,” it said.
It’s likely that the upcoming Renters Reform Bill and increased regulation will further encourage landlords to exit the market.
4. House prices will bottom out this summer
The last year has had its ups and downs for those lucky enough to be on the housing ladder so, what does 2024 have in store for them?
“The prospect of interest rate cuts towards the end of the year means we expect the market to have bottomed out by the summer, even if the prospect of a general election pushes the start of a recovery into 2025,” says Lucian Cook, head of residential research at Savills.
“Lower mortgage rates and more economic stability should halt house price falls in 2024,” says Beveridge.
“Household incomes are now rising faster than inflation which should improve affordability a little and bring more buyers to the market. We’re expecting 0% price growth across Great Britain in Q4 2024, based on the ONS House Price Index, with growth returning in 2025.”
5. Less expensive areas will become more popular
“Formerly overlooked residential markets in the commuter belt around London will remain in focus as people continue to re-calibrate their work-life balance and find better value in less-connected locations. In general terms, less expensive parts of the UK will see stronger demand and house price growth, as affordability constraints continue to restrict buyers,” sais Tom Bill, head of UK residential research at Knight Frank.
6. The Bank of England will cut interest rates five times
2023 was not a great year for mortgages, as rates steadily increased and borrowers felt the pinch, but the outlook for 2024 already looks much brighter.
“In October, financial markets were pricing in a single interest rate cut of 0.25% by the end of 2024. By the end of last week, they were expecting five,” says Bill.
Read more: Why tax cuts in 2024 might not leave you paying less
“The main reason for this changing outlook is that inflation is falling faster than expected. As a result, mortgage lenders have dropped their rates fairly significantly in recent weeks, partly to win business in a low-volume market.”
7. Three-year fixed rate mortgages will become more prevalent
And it’s not just the rates of mortgages that are changing — the types of mortgage product borrowers take out will be altered too.
“Options for fixed rates at two- and five- years will still be around, but I predict the less competitive three-year rates will become more popular and competitive”, says Walker.
“With the Bank of England rate cuts, we will see more competitive products across the board giving prospective homeowners more choice and flexibility.”
8. The election is unlikely to make waves
With a general election needing to be held before January 2025, this year will almost certainly see the country going to the polls.
“We don’t expect it to have much of an impact on the housing market,” says Beveridge. “With both of the main political parties fighting for the centre ground, the chance of radical change, which can often spook house-hunters, is lessened.
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“While buyers and sellers in the top end of the market might be a little more cautious, as it's often here that the big tax changes hit hardest, a stronger affordability backdrop should mean more moves take place across the whole market this year than in 2023.”
9. The March budget will stimulate the property market
While the effect of the election itself may be minimal, what the Conservative party does before then to woo voters may be significant.
“Activity could be boosted by pre-election giveaways in the March budget,” says Bill. “There is speculation surrounding tax cuts as well as measures to help first-time buyers, including longer fixed-term mortgages, smaller deposits, and a revived help-to-buy scheme.”
Watch: UK house prices creep up as experts predict 'smoother year' for buyers and sellers
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