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Housing Market Predictions 2024: What Will the Property Market Look Like Next Year?

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Daniel Chard, Partner at Bird & Co, explores his predictions for the housing market and what property trends will be popular in 2024.

The housing marketing is an ever-changing beast, and one that is incredibly sensitive to changes in politics and the economy. The past few years in particular have been a true reflection of this sensitivity. The COVID-19 pandemic, as well as Brexit and our political unsettlement, has made it almost unpredictable.

That said, as experts in the field, we like to give it a fair shot to provide home buyers with a sense of clarity over what they can anticipate for the year ahead.

In this article, we’re going to take a look at our predictions from 2023 and explore whether we were correct or not, to give us an overview of the housing market this year just gone. Then, we will be taking you through our market predictions for 2024, including information on housing demand, pricing, mortgage rates, and more.

Housing Market Predictions for 2023: Were we Right?

Last year, the team at Bird & Co made their predictions for the housing market in 2023, including:

  • Less demand from first-time buyers
  • Property prices remaining low
  • A demand for sustainable housing
  • House buyers considering extreme weather in their home purchases
  • People flocking to the countryside

The question is, how accurate were we?

Housing Demand and Pricing in 2023

Demand for housing certainly reduced in 2023, not just for first-time buyers but for everyone, as uncertainty in interest rates took hold. In fact, mortgage interest rates skyrocketed to higher than they have been in the last few decades, and remain high at between 5 and 6.5%.

This was compounded by the effects of the cost-of-living crisis, which sent energy prices soaring, leaving little savings for those looking to make the move to home ownership. This lower demand sent property prices plummeting, after the huge uptake in pricing post-COVID.

These figures were also impacted by the uptake in buyer activity at the end of 2022, when the Stamp Duty holiday took effect. Activity around this time caused a frenzy, which abated come early 2023.

Sustainable and Weather Dependent Housing Needs in 2023

Although there were no truly significant developments in these trends in 2023, we see extreme weather and climate control as continued key considerations for governments. This is especially the case, what with Net-Zero targets and Sustainable Housing initiatives put in place by governments across the globe.

On an individual scale, the cost-of-living crisis has put our need for energy saving tactics into sharp relief. People continue to consider energy saving in their home purchases, including insulation, window glazing, and energy certificates.

A Move to Countryside Living in 2023

Despite our prediction that, pre-pandemic, people would be looking to move to the countryside, research shows that people moving to “sparse or remote villages” has dropped, and so too have people looking to move to these places. This comes despite people valuing being in nature as part of their overall wellbeing, and costs of housing in the country being generally lower than cities.

Although country living remains a want, it looks as though this is perhaps not a priority for home buyers, and this may continue to be the case for many.

Housing Market Predictions for 2024

After another turbulent year for the housing market, how will the picture fair looking ahead to 2024? Here are our predictions…

Mortgage Rates Will Go Down in 2024

As we saw above, the increase in mortgage rates has since been met by a steady reduction. This reduction has plateaued somewhat in October/November 2023, but we feel it may gradually reduce in 2024, helping to stabilise the housing market.

A fair amount of hardship can still be expected for those whose fixed term mortgages come to an end this year. That said, for those looking to buy in the coming year, a more positive picture can be seen.

Housing Demand Will Increase in 2024

As mortgage rates decline, and the cost of living crisis abates in 2024, those most impacted are likely to become more financially secure. Coupled with predictions by experts for rising rental prices to continue into the new year – much higher than rising wages – getting on the property ladder has never been more desirable for those who have the means.

Because of this, we can anticipate housing demand to increase in 2024. This is especially true for first time buyers, who may wish to exit the rat race of renting. Comparatively, current homeowners may find they wish to stay put until the market stabilises further, so we may see a surge in second- and third- time buyers nearer the end of the year.

House Prices Will Fall and Then Stabilise in 2024

We envision house prices will continue to fall and remain low at the start of 2024. However, as mortgage rates reduce further, and housing demand rises, the market should begin to pick up, and thus we foresee house prices stabilising at these lower rates.

Housing Transactions will Pick Up in 2024

According to Zoopla in September 2023, the number of housing transactions completed in the UK over 2023 is forecast to be over a fifth lower than 2022. This will represent the lowest figure since 2012.

No doubt, these statistics have been influenced by the issues above, including mortgage rates, house prices, and the surge in rental prices, which have introduced a perfect storm for prospective buyers.

That said, based on the factors we have mentioned, we predict more housing transactions to occur in 2024. We may also see completion rates increasing, as people could be more willing to put everything on the table and get it done before the market shifts once more.

Young People Will Leave London in 2024

There is clear research to indicate that demand for housing in London is decreasing, whilst the move to areas like Wales, the North East and the South West is much more desirable.

We predict that this will continue into 2024, for several reasons. Firstly, the rental market in London is looking to remain extremely competitive and, with average rental prices being £2,192 and ever-increasing, young people are unlikely to keep up.

On top of this, remote or hybrid working continues to pervade the job scene and, as such, the need for workers to remain in London to hold down their office jobs is no more. For those looking for the urban lifestyle in a more affordable setting, and with good transport links to London, many will look elsewhere.

Landlords Selling Up in 2024

Increased mortgage rates and changes in legislation have landed landlords in a sticky situation this year. Of course, the rental market continues to remain popular, but cost-of-living and stagnant wages have meant many are unable to leave their current rentals in order to buy.

As such, many landlords looking to make ends meet may be feeling less obliged to hike their rates, wanting to strike a balance between keeping their property filled, whilst keeping up with their own racking expenses.

With rental prices looking to exceed wages in the coming year, many people may be pushed out of the market, and turn to cheaper areas. This leaves landlords with three options:

  • Hike the price to maintain their outgoings and keep the property empty to await a willing tenant;
  • Keep rent prices low to keep the property filled, and either break even or make a loss;
  • Consider renting their property out on Airbnb as a more lucrative option.

For those without a sturdy financial cushion, particularly independent landlords, sticking it out to reap the benefits later down the line may not be an option. This no-win situation could leave numerous landlords high and dry, pricing them out of the market and forcing them to sell up.

Sustainable New Build Developments Springing Up in 2024

According to ONS figures, the total number of completed new builds going up year on year is gradually increasing. Although some years it decreases, the pattern shows an upward trend, suggesting that Local Authorities are heeding the call for more housing.

Amongst other cities, Bristol appears to be at the forefront of developments in this regard, prioritising new build estates across the board. These estates not only consider the growing concern for available housing in the UK, but appear to be taking into consideration the global concern for green ventures.

We predict these numbers will only go up in 2024, and sustainability will be at the forefront of these building projects.

AI will Flourish in the Property Sector in 2024

2023 saw huge advances in Artificial Intelligence, with ChatGPT and other advanced language models taking the general public by storm. This has led to many discussions surrounding AI’s capabilities in workload management.

For the real estate and conveyancing market – especially for those looking to keep up with the competition – we see AI becoming part and parcel of everyday real estate transactions. Most notably, AI-powered research and processes could help to analyse contracts, flag any issues, and streamline the conveyancing process. Ultimately, this will enable more efficient and faster transactions.

For conveyancers, this could mean a bright future, enabling them to take on more clients in a shorter space of time to meet the predicted uptake in property transactions in 2024.

The Future Looks Bright for the Property Market in 2024

2023 has been an extremely turbulent year for all aspects of the housing market. The cost-of-living crisis, the aftermath of the Stamp Duty holiday, changes in legislation for landlords and mortgage interest rates increasing has led to various fluctuations in property demand. As such, house prices have fluctuated, and the rental market has also suffered.

Looking forward to 2024, we see things stabilising once more, with mortgage rates falling and then plateauing, house prices falling and then stabilising, and housing demand increasing.

That said, landlords may have a rough road ahead. Those with the financial means to do so may see benefits in riding it out, but those without such a fallback may see themselves having to sell up. Especially for those in London, where demand may decrease, this problem could be even starker.

For those looking to sell or buy in 2024, Bird & Co’s conveyancing services are here to help. To get in contact with a member of the team, please call 01476 372 040, head to our contact page, or start a quote online

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