November Property Market 2024

Buyer Confidence is on the Rise

The November property market saw the number of agreed sales 26% higher than at the same point in 2023, which was a quieter period for the housing market. In addition, buyer demand has surged by 25%, indicating a greater level of confidence among potential buyers. This increased demand, combined with the higher volume of sales, has contributed to a rise in house price inflation, as more competition for properties drives up prices. The overall market is showing signs of strength, with greater buyer confidence and a more active sales environment helping to push prices upwards.

The North West Leads the Way for Price Growth

As of October 2024, the average house price in the UK stands at £267,200, according to Zoopla. Reflecting a modest 1.5% increase in property values compared to the same time last year. Despite this, house prices are expected to rise by 2% by the end of the year, indicating continued upward momentum.

Notably, house price inflation has turned positive across all regions and countries within the UK, with some areas experiencing particularly strong gains. In England, the North West has performed the best, registering a 2.9% rise. However, the pace of growth remains more subdued in southern England, where affordability challenges continue to dampen price increases. In these areas, price inflation remains below 1%, reflecting ongoing pressure on buyers in high-cost regions.

Overall, the November property market saw the UK housing market showing resilience. Investors can anticipate continued upward movement in house prices, particularly in areas where demand outweighs supply.

Income Growth Narrows Wage and House Price Gap

Last year, Zoopla highlighted that rising incomes would be crucial for improving housing affordability due to higher borrowing costs. In 2024, income growth has significantly outperformed expectations. According to the latest data from the Office for Budget Responsibility (OBR), household disposable incomes increased by 15% between Q2 2022 and Q2 2024. However, house prices had only risen by 1.5% over the same period. Leading to a gradual improvement in housing affordability without requiring additional declines in property prices.

This shift has provided relief for potential buyers and investors, as the gap between wages and house prices has narrowed. Making home ownership more accessible in some areas. Looking ahead, income growth is expected to slow down after 2025. According to the OBR’s forecasts, which may limit further improvements in affordability. This suggests that while the current market is benefiting from stronger income growth, longer-term affordability may depend more on broader economic factors, such as interest rates and inflation, rather than continued rapid income increases.

Mortgage Rates Are Set to Remain Steady

Mortgage rates for homebuyers have decreased by 1% over the past year, with the current average standing at 4.1%. Despite a slight uptick in rates following the Autumn Budget, borrowing costs are expected to stabilise around 4.25% for a typical 75% loan-to-value, 5-year fixed-rate mortgage.

This level of borrowing cost remains relatively manageable compared to previous highs, which is beneficial for both homebuyers and investors seeking to finance property purchases. For investors, this suggests that while interest rates have not returned to the ultra-low levels seen in previous years, they remain steady and slowly dropping. The forecasted stability in borrowing costs offers some predictability for financial planning. Although any significant shifts in the economic landscape could still impact rates in the short term.

2025 Market Predictions

The housing market has regained momentum in 2024, driven by stronger income growth and lower mortgage rates. This has improved affordability for both buyers and investors.

Looking ahead, we anticipate house prices will increase by approximately 2.5% in 2025, with a 5% rise in the volume of sales compared to 2024. This growth will be supported by continued demand in key housing markets.

Additionally, rental prices are forecast to increase by 3-5% annually in 2025. Presenting an attractive opportunity for investors seeking to capitalise on growing rental yields. As rental demand remains strong, these price hikes will enhance rental income. Further boosting profitability for investors.

With the combination of rising house prices and rental income growth, 2025 presents a favourable environment for property investment. Offering both capital appreciation and improved cash flow potential.

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