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Current Trends in UK Property Prices
The property market in the UK is currently experiencing a notable upward trend, with house prices seeing increases for the third consecutive month. In September, there was a 0.3% rise, elevating the average house price to £293,399, marginally less than the record set in June 2022. This increase reflects a significant 4.7% surge in year-on-year growth, a clear indication of the market’s resilience. Nationwide has also reported an annual growth rate of 3.2%, highlighting robust market conditions since late 2022.
Regionally, the north of the UK is experiencing stronger house price growth compared to the south. For instance, areas like the North West have seen annual growth rates of 4.9%, with Scotland and Yorks & Humber not far behind. However, London remains an outlier, recording only a 2.0% growth, with some coastal areas in the south witnessing declines in prices.
Market Dynamics and Future Predictions
The property market’s dynamics have become increasingly fluid, as evidenced by mortgage approvals which now almost mirror pre-pandemic levels, dipping just 3% below the 2017-19 average. Furthermore, new sales and instructions in September are significantly higher, demonstrating heightened market activities which are 8% and 9% above the same period averages from previous years, respectively. Additionally, the supply of homes has visibly expanded, with estate agents having an average of 31 homes for sale, a 20% increase from the previous year. This surge in supply is pivotal in potentially stabilising house price inflation.
Looking ahead, forecasts for 2024 remain mixed. Industry giants like Savills and Knight Frank predict modest increases in house prices, projecting rises of 2.5% and 3.0% respectively. In contrast, the Office for Budget Responsibility anticipates a potential decline of 2.3%. Such divergent predictions underscore the complex interplay of factors, including mortgage interest rates, expected to shape market conditions heavily in the near term.
The Bank of England’s approach to interest rates will play a crucial role. With the possibility of further rate cuts in response to inflation targets, the housing market could receive much-needed stimulation, fostering increased buyer activity and confidence.
Implications for Investors in Buy-to-Let and HMOs
The forecasted market shifts present critical considerations for investors, particularly those involved in Houses in Multiple Occupation (HMOs). Rental market dynamics are experiencing changes, with growth slowing in densely populated regions such as London due to reaching an affordability threshold. However, annual rental growth across the UK still stands at 4.8%, varying significantly by region. Investors [can explore the advantages of HMOs](https://www.propertyinvestortoday.co.uk/beginner-guides/houses-in-multiple-occupation-how-to-invest) to optimise rental yields, leveraging the perpetual high demand for rental properties.
The looming general election adds an additional layer of uncertainty. While it may stall certain market activities, elements such as the summer market’s momentum and recent Bank Rate cuts have invigorated current conditions. The anticipated Budget announcement towards the end of October could introduce changes to capital taxation and support for new build housing. These adjustments may particularly impact Buy to Let landlords and second homeowners who are already anticipating regulatory shifts.
Key Takeaways
- The UK property market is experiencing a third consecutive month of price increases.
- Annual property price growth has shown notable strength, particularly in northern regions.
- Mortgage approvals and increased home supplies suggest an active market.
- There is uncertainty around future predictions, with mixed forecasts for 2024.
- Interest rates and upcoming economic policies hold significant market influence.
- Investors in the Buy-to-Let sector should prepare for possible regulatory and market shifts.
Conclusion
The recurring themes within this report highlight a dynamic landscape for the UK property market as we delve deeper into the latter part of 2024. Investors and homeowners alike must remain vigilant and adaptive, taking note of both macroeconomic trends and regional fluctuations in housing and rental markets to optimise their investments and assets. References such as market forecasts serve as essential tools to anticipate future market behaviours, particularly important for those invested in HMOs and similar property assets.
Sources
- [Nationwide House Price Index](https://www.nationwide.co.uk/about/house-price-index)
- [Savills UK: Residential Property Forecasts](https://www.savills.co.uk/research_articles)
- [Property Investor Today: Beginner Guides](https://www.propertyinvestortoday.co.uk/beginner-guides)
