Our 2024 property investment predictions

3 January 2024

The beginning of 2023 felt much the same as 2022 – with the UK property industry filled with scrutiny, confusion and mixed advice from ‘experts’ far and wide. 

However, at the end of 2023, a very different picture is emerging. Interest rates and inflation have both shown a steady and promising decline, housing demand remains high and market confidence is returning.

We can’t predict the future. What we can do is combine our expertise, research and experience and give you our predictions for the property investment market in 2024.

Interest rates will fall – slow and steady

We’ve already seen interest rates stabilize in Q3 and Q4. In December, the UK rate of inflation also fell to 3.9% (expectation was 4.3%) –  a very encouraging step towards the Bank of England’s 2% inflation target of 2025. Economists predict that these figures will continue to fall over the course of the next year, albeit slowly and gradually.

Swap rates are another factor to consider. At the end of last year the swap rate, i.e. the average amount a mortgage provider has agreed to pay the loaning financial institution, began to fall. In 2023 the five year swap rate peaked at 5.25%, by December this had made its way down to 4.32%. This is relevant as when the swap rate falls the interest rate typically follows suit. 

The knock on effect of this is more buying power for consumers, improved affordability that encourages spending and buyers returning to the market. The result of rising demand and a stagnant supply? House prices rise. 

House prices won’t crash

Historically, economic conditions similar to those we are experiencing now have resulted in a house price crash. Although it is understandable to look to the past for guidance, there is another important factor to consider in this instance – supply. 

As explored above, interest rates and inflation are falling which encourages buyers to return to the market. In conjunction with this, the housing market is experiencing unprecedented rental demand. Some estate agents report an average of 19 potential tenants per instruction and properties being let in under 48 hours. 

Forecasts on property prices in the next 12 months are undeniably mixed, but Nationwide report signs of recovery which are set to continue in the new year. 

Keep your eye on EPCs

With interest rates continuing to take much of the 2023 spotlight, a lack of attention has been given to property energy efficiency or energy performance certificates (‘EPCs’). Although plans for a minimum EPC rating were scrapped earlier in the year, there is still heavy pressure on the Government to amend energy efficiency legislation and better protect the environment. 

Even without Government legislation, tenants are increasingly aware of property energy efficiency due to the steep increases in utility bills in the last 12 months (set to rise again in January 2024). In simpler terms, landlords who choose to invest in EE measures now will reap the rewards of tenant selection, rental price and future compliance.

There’s still a way to go

We are confident that the property investment market will improve throughout 2024. Having said that, we remain realistic that there are more challenges afoot and recovery (although promising) will be slow. And as ever, the market continues to offer opportunities that won’t be available in more stable periods , for those ready to invest.

Start leveraging opportunities and building your portfolio today. Contact us here.