August Market Outlook

2024 has seen a positive turnaround in the UK housing market after a prolonged period of uncertainty towards the end of 2023. The first half of the year has shown signs of recovery, driven by a stabilising economy and falling inflation. Key factors contributing to this positive outlook include improved economic conditions, decreasing mortgage rates, rising house prices, and record-high rents. Heading into August we give our outlook on the market based on recent property market data published by sources such as The Bank of England, Office for National Statistics (ONS), Rightmove, Zoopla, Savills and HomeLet respectively.

Introduction

Key Takeaways

1. Economic Improvement: The UK economy has stabilised with inflation dropping from the peak of 11.1% Oct 22 to 2% in May 24, and the Bank of England maintaining the base interest rate of 5.25% for 12 months, with the first rate cut in 4 years on the 1st of August. The outlook for future rate cuts is positive although this may be slower than initially forecasted.
   
   

2. Mortgage Rates: Mortgage rates have fallen, stimulated by the first base rate cut previously mentioned, with the five-year fixed average across major lenders at 4.73% down from 4.76% the previous week. This trend is expected to continue, opening the door for more investors returning to the market and leveraging their cash for improved returns.
   
   

3. House Price Growth: House prices have started to rise again, albeit very slowly initially, the outlook is positive with the expected annual increase to reach 2% by the end of 2024. Mortgage approvals and new buyer enquiries have also increased.
   
   

4. Market Trends: The supply of homes for sale has grown significantly, with the average estate agent having 16% more homes listed for sale than a year ago. In addition to more properties listed for sale, Zoopla reports buyers are now paying 96.8% of the asking price, up from 95.6% in October 2023, the combination of increased supply, lower reductions on asking prices and falling time to secure a buyer indicates improved buyer confidence and a gradual return to a seller’s market.
   
   

5. Positive Forecasts: Savills predicts a 2.5% average house price growth across the UK in 2024, with a five-year growth forecast of 21.6% due to higher GDP and wage growth expectations.
   
   

6. High Growth Areas: Cities like Manchester and Liverpool remain prime investment locations due to low supply, high population growth, and slow construction rates.
   
   

7. Record High Rents: Rental prices continue to climb to new record highs, with a 7.3% year-on-year increase in July 2024. Boosting opportunities within the UK property market for buy-to-let owners, particularly in fast-growing regions in the North East and the North West.

Conclusion

The UK housing market has transitioned from a challenging period in Q4 2023 to a more balanced and stable environment in the first half of 2024. Economic improvements, stabilising mortgage rates, and increasing house prices have led to heightened market activity and confidence. High-growth areas such as the North East and West continue to present significant investment opportunities. For property investors, the current landscape offers both challenges and opportunities, with a need for strategic decisions based on regional performance and economic indicators.