UK Property Market Forecast for 2024

The last three years have been dotted with record-breaking numbers for the UK property market. Some are good news and some are not-so-good news. Like the rest of the world, the industry has been shaken by extreme events – the pandemic, wars, and other things. Despite all this, the country’s real estate sector remains a strong economic force.

As we enter another year, we are faced with the question: what will the property market be like in 2023?

Let’s see what our experts predict based on the available data:

House prices will remain on a downward trajectory

After an accelerated rise during the first half of 2022, the average house prices began to fall steadily beginning with a 0.1% dip in September followed by a 0.4% in October. It then plunged to 2.4% in November and most recently, 1.5% this December.

This 4-month-long drop is expected to continue this 2023 until it settles down to the same level as it was back in April 2021, before it exploded out of proportion.

The predictions vary widely across the board. Some predict a decrease between 5 to 9% while others say it could be as much as 12%.

In recent weeks, property sellers have been reported to reduce their asking prices by an average of 4% in able to land a deal with buyers.  

Interest rates will continue to rise

This cooling down of housing prices is the result of several factors. One of the most apparent is the bounce back in interest rates.

Back in March 2020, the Bank of England flattened the official bank base rate to a historic 0.1 percent in an effort to alleviate the economic damages of the pandemic.

However, a new threat to the global economy came in the form of inflation. The bank then countered this by increasing interest rates. Since December 2021, the rate has increased nine times. It currently sits at 3.5% – the highest it has been in the past 14 years.

This is expected to rise furthermore going into 2023.

Buying demand will slowly cool down

In a domino effect, the fall in interest rates triggered a sudden surge in buying demand. Properties were being sold daily, with some getting purchased in less than two weeks after being put on the market.

This momentary spike in demand is now subsiding. Aside from the rise in interest prices, the challenging cost of living also limits the purchasing capacity of people.

Rental rates will continue to climb

Due to the towering house prices in the past years, more people are opting to rent a place than buy a house. This increase in demand has been pushing rental prices upward. Additionally, there is a lack of supply due to rental properties being sold by owners to cope with financial challenges.

This is projected to continue this year, rising further by at least 10%.

Interest in rural locations will push on

After going through lockdowns and being constrained indoors, people developed a renewed longing for space and the refreshing outdoors. There is a growing desire for properties in rural and coastal locations.

Reinforcing this trend is the fact that many working individuals have shifted to remote setups, freeing them from the necessity of residing in cities.

Read our recent article, “Property Investment: Choosing Between City or Countryside Location”

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