We reflect on a tumultuous year as 2023 draws to a close, marked by the highest mortgage rates in 15 years, a dip in house prices, and a decrease in property transactions.
Despite the rollercoaster ride, portfolio landlords resiliently held onto their buy-to-lets, and market confidence began to recover as the Bank of England maintained the base rate.
With the year concluding and the new year on the horizon the approaching year offers a strategic opportunity for property investment, enabling wealth-building amid the conditions of a buyer’s market.
Savills predicts a substantial 17.9% growth in property prices by 2028.
While property prices experienced monthly fluctuations throughout the year, there was an overall year-on-year decline, with Rightmove forecasting a further 1% drop in 2024. While this may not be the most encouraging news for existing landlords, it presents an opportunity for investors to enter or expand their portfolios at more affordable prices. Zoopla notes that current market conditions are as favourable for buyers as they were in 2018. Moreover, Savills predicts a substantial 17.9% growth in property prices by 2028, suggesting that entering the market in 2024, when prices are low, could yield significant benefits in terms of capital appreciation.
The trend of declining house prices coincides with a surge in seller discounts. Not only did prices decrease between November and December, but property discounts also reached a 5-year high. Zoopla reports an average discount of 5.5%, translating to £18,000 off the original asking price. These favourable market conditions have resulted in a 6% increase in buyer demand. As competition among buyers intensifies, investors are advised to consider entering the market sooner rather than later to capitalize on the current discounts offered by sellers.
The property market, previously characterized by fierce competition and a limited supply of properties during the pandemic, has undergone significant changes. There is now a healthier supply of properties, with the number of listed properties reaching a 6-year high. Property sales volume has also increased by 15% compared to 2022. This increased supply and demand give new investors a broader selection to find the right buy-to-let property. Three and four-bedroom properties have experienced the most significant market growth, offering landlords the opportunity to diversify their portfolios with potential HMO properties.
Following 14 consecutive rate hikes, the Bank of England opted to maintain interest rates at 5.25% in September, subsequently holding them steady in November and December. This decision prompted lenders to reduce their interest rates, leading to an influx of sub-5% mortgage products. Analysts predict that if this trend continues and the base rate further decreases, sub-4% products could be available by the first half of 2024. The positive outlook on interest rates compared to the 15-year peak in July 2023 makes 2024 an opportune 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 an investor’s capital, providing access to better properties and increased potential for high returns.
The National Residential Landlords Association (NRLA) research reveals that 71% of landlords reported increased rental demand in the current year, nearly tripling the 2019 figure of 22% and 76% of landlords reporting increased tenant interest. There is continued Growth in Rental Demand. This heightened demand provides investors with confidence in the property market for 2024, knowing that high returns are achievable due to the available demand for their investment.
As stability returns to the property market at the close of 2023, indications suggest that this trend will continue into 2024. With property capital appreciation expected to reach 17.9% in 2028, entering the market in the upcoming year positions investors to benefit from the projected capital growth.
For your New Year Buy-to-Let Property Global Investments UK property investment division has ready to rent property investments wating for you. Please contact us for our latest availability.
