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Property Market Update: Buyer Demand 11% Higher in 2024
In our property market update, research shows a renewed demand for property among property investors and first time buyers.
In this article, we take a look at the key changes in the UK property market since 2023. Research across multiple lenders has shown that the new year brought a restored appetite among buyers, with room for growth in the coming months of 2024.
Recent data from Zoopla shows that buyer demand in the UK has risen by 11% in the past year, and agreed sales are up by 15%. The market is on track to reach 1.1m transactions across the year, up from 1m in 2023.
This is likely influenced by gradually decreasing mortgage rates in anticipation of the Bank of England base rate dropping. That being said, the market hasn't fully recovered from the financial instability we've seen over the past three years due to COVID-19, the war in Ukraine, and 2022's mini-budget. The cheapest mortgage deals dipped below 4% briefly in February but have since been pulled from the market. Rates have been squarely sitting at around 5% for a two-year fixed rate and approximately 4.7% for a five-year fix.
Financial experts expect the Bank of England base rate to drop in the next few months, as inflation is on track to reach the government’s goal of 2%.
The Bank of England base rate has been frozen at 5.25% due to ‘sticky inflation’, and experts have warned that while the Bank of England is optimistic that inflation will drop further in the coming months, we shouldn’t expect the low interest rates we saw in previous years.
Additionally, those looking to buy this spring may welcome the news that house prices have dropped. This is arguably down to tight budgets and the outright lack of buyers in 2023, forcing the hand of sellers as the market becomes more competitive.
See data: Mortgage Pulse Report 2024
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Has the Demand for Buy to Lets Increased?
What Does This Mean for House Prices?
How Can You Find an Affordable Mortgage?
Has the Demand for Buy to Lets Increased?
Tighter letting legislation and high interest rates have eroded rental yields. In 2023, a portion of small landlords exited the market, which may have contributed to the excess of properties for sale towards the end of last year.
However, it does seem that portfolio landlords are taking the financial hit and simply waiting it out. According to research from mortgage provider Together, over one third (34%) of landlords plan to expand their portfolio in 2024. This could mean that larger landlords who have the capital to ride out the current economic storm aim to cop a bargain this year amid the drop in house prices.
In Together’s data, while 10% of landlords had reservations surrounding the buy to let market in in 2024, 68% felt positive.
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What Does This Mean for House Prices?
On average, house prices fell by 0.5% year on year, but this number isn’t indicative of the whole country. House prices dropped in the South of England but rose everywhere in the UK. House prices dipped by -5.2% in London during 2023 – the largest decrease in the UK.
Despite interest rates remaining relatively high, many prospective buyers are tentatively entering the market. For many, the indications that interest rates will drop in the coming months are enough for them to make the jump now that the market is looking more stable and that they have saved a sufficient deposit.
The inflation rate is currently at 3.2%, and the goal is 2%. The Bank of England has been working towards this target since October 2022, when inflation peaked at 11%. Since then, the Bank of England has been increasing the base rate with the aim of reducing inflation.
There has been a lot of discussion among finance professionals as to when we’ll see a reduction in the Bank of England base rate. It’s likely we could see a reduction as soon as May if inflation continues to drop.
Because of this, a question at the top of many Britons' minds is whether a fixed or tracker mortgage is most suitable.
Read blog: The 9 Best Places to Live in the UK & Moving to the South West from London
See the latest market news below.
Where Are the Most Affordable Places in the UK to Buy a Home?
With mortgage rates at a 15-year high, it's not the easiest time to buy property, for first time buyers and investors alike. Regulations have gotten stricter since 2022, and high mortgage rates have thinned profit margins, making owning a standard buy to let a trickier affair than a decade ago.
However, this isn't the case everywhere in the UK. The North of England has seen entirely different purchasing behaviour to the South since the early 2000s. In select areas, particularly Yorkshire, North Lincolnshire and Durham, you can still easily buy a property for under £100,000.
While house prices have dropped slightly due to lack of affordability across London and the rest of the South, this isn't the case in other regions.
Due to affordable housing and cheaper living costs in these areas, most of Northern England and Scotland have been resistant to the housing slump that the rest of the UK has experienced in response to high mortgage rates. The property market in these regions has remained robust and has seen growth throughout 2024.
There's certainly hope, both for property investors and those looking to get on the housing ladder. If you're looking to invest in a buy to let in 2024, it may be worth looking in affordable areas with a consistent rental demand, such as university towns or areas close to large employers. Property hotspots like these are still reaping generous rental yields, while the rest of the country is seeing slow growth.
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How Can You Find an Affordable Mortgage in 2024?
Despite current optimism about declining mortgage rates, deciding on the best option can be daunting and confusing.
We can help you compare mortgage products and their costs to find the best deal for your specific situation from a wide range of lenders nationwide.
Expert mortgage advisors keep their fingers on the pulse of the latest mortgage market news. Whether you're a first-time buyer, looking to refinance, or investing in a BTL, we can help you understand your mortgage options so you feel confident you're making the right choice.
To see what we can do for you, give us a call at 0203 900 4322 or book a free consultation below.
