2024 UK Housing Market: Knight Frank Revise Forecasts
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The UK housing market has entered 2024 on a wave of optimism, as a shift in interest rate expectations signals a brighter future. Let's dive into the latest insights from Knight Frank to understand what lies ahead for property buyers, sellers, and investors.
A Shift in Interest Rates - A Beacon of Hope:
In a turnaround from October's predictions, financial markets are now expecting not just one, but five interest rate cuts by the end of 2024. This shift is primarily due to inflation rates falling more rapidly than anticipated, leading to a significant drop in mortgage rates.
UK House Price Forecast - The Rise Ahead:
Against this backdrop, Knight Frank has revised its previous forecasts. Here's what we can anticipate for the UK's mainstream house prices:
2024 Prediction: A rise of 3%, overturning the 4% decline expected in October.
Five-Year Outlook: An estimated cumulative growth of 20.5% by 2028.
Reports from Halifax and Nationwide suggest a market recovery, with recent trends indicating a bottoming out of prices.
Sales and Transactions - Signs of Recovery:
There's been a noticeable increase in housing transactions and mortgage approvals, with a 10% rise in November compared to the previous year. This uptick points to a potential increase in sales volumes for 2024.
Regional Variations - London and Beyond:
London Market: A moderate growth of 2% is forecasted, with affordability constraints in the capital.
Prime Country House Market: A lesser decline of -2% expected, as the market adjusts post-pandemic.
Prime London Markets: More positive growth is on the horizon, though political factors, like the upcoming general election, could influence the market dynamics.
The General Election - A Potential Game Changer:
Political events, including the general election and the situation in the Red Sea, could impact the housing market. However, potential pre-election incentives might boost market activity.
UK Rental Market - A Resilient Sector:
Despite challenges, the rental market remains robust. Here’s what Knight Frank forecasts:
Rental Growth: 5.5% in prime central London and 4.5% in prime outer London.
Market Dynamics: A stronger growth is expected in lower-value markets, with supply and demand playing a key role.
As we step into 2024, the UK housing market is showing signs of resilience and growth, driven by changing economic conditions and market dynamics. While uncertainties remain, the outlook is looking more promising for those looking to navigate the property sector this year than twelve months ago.
