As autumn 2024 rolls in, the UK property market is navigating a period of adjustment and uncertainty. After the extraordinary growth in house prices over recent years, driven by factors like low-interest rates and a demand-supply imbalance, the market has shown signs of cooling. For buyers, sellers, and investors alike, understanding current trends and projections is crucial to making informed decisions in this shifting environment.
Current Trends in the UK Property Market
- Price Correction and Stabilisation The UK has experienced a gradual price correction throughout 2023 and into 2024. House price growth has slowed considerably compared to the post-pandemic surge, with some areas seeing marginal declines. According to the Nationwide Building Society, annual house price growth dipped to around 0.5% by mid-2024, down from the double-digit growth figures seen between 2020 and 2022.Key regions such as London and the South East, which saw the sharpest rises during the boom, are leading the downturn, with average house prices falling by 3-5% in certain areas. In contrast, more affordable regions in the North and Midlands are showing resilience, with modest price increases or stabilization as buyers seek value for money.
- Rising Interest Rates One of the most significant factors influencing the property market is rising interest rates. Since mid-2022, the Bank of England has steadily raised the base rate in an attempt to combat inflation, with the rate standing at 5.25% as of September 2024. These rate hikes have had a profound effect on mortgage affordability.Many prospective buyers are finding it more difficult to secure affordable mortgages, with monthly payments for first-time buyers up by as much as 25% compared to just two years ago. This has tempered demand in certain segments of the market, particularly for properties in higher price brackets.
- Cooling Demand from First-Time Buyers Rising mortgage costs, combined with a reduction in government schemes such as Help to Buy, have pushed many first-time buyers out of the market. In response, there’s been an uptick in demand for rental properties, leading to increased competition and higher rents. For those able to buy, there’s a growing trend of seeking out smaller properties or homes further from city centers in search of affordability.
- Supply Shortages Persist While demand has cooled, supply remains constrained. New housing developments continue to lag behind national targets, with planning permission issues, rising construction costs, and economic uncertainty limiting the number of new homes being built. This supply shortage has helped cushion house price declines, preventing more significant falls across the board.
