December Newsletter
2023 proved to be a challenging year for the UK property market due to very high inflation rates, with transaction rates down 23% compared to last year. Despite this, 2023 has been our company’s best year to date. Getting the right advise in a softer market or in a booming market is essential – our goal for our clients is to give them the confidence that they are buying a best-in-class home that will always be sought after.
Is now the right time to buy a home?
Buying a home in a softer market has big advantages – less competition and potentially bigger discounts. Although no one has a crystal ball, many experts believe the market will soon start to strengthen, therefore buying in the next few months could be an advantage.
In a recent interview with CNBC, Knight Frank’s head of research stated “if you’re looking at what the Bank of England does. The best time is arguably now”. The Bank of England is unlikely to increase interest rates again, which has a direct correlation to mortgage rates. It is unlikely that there will be deep cuts to interest rates - it will probably happen in slow increments. Once this happens, prices should start to stabilize/increase.
Savills are predicting that next year won’t see a price decrease or increase in prime central London (PCL), however they predict an 18.7% increase by 2028. The agency has pointed out that values remain 19% below their peak in 2014, so they are arguing that the market is overdue for a recovery. PCL has proven to be resilient in all the turmoil of the last year, with prices only falling by 1.2%.
2024 could potentially be the last window of opportunity to buy a property in London ahead of a predicted period of strong growth.
Signs of improvement
We are beginning to feel the London market already start to strengthen. Many areas of the UK saw a huge price boom during covid – however London did not. This is one of the reasons why it has proven to be very resilient and less affected by price falls in the rest of the country in the last few months. According to an article in The Negotiator, “as a result, the number of new prospective buyers was 7% higher than the five-year average in the three months to November in London, which compared to a decline of 10% across the UK. Furthermore, our own data shows that the number of exchanges were up 5% in the capital during the same period but 16% down across the UK.”
The rental market
The rental market is still booming. According to Savills, the typical private rent will end 2023 9.5% higher. Knight Frank are predicting a 4-5% rental growth next year, so there is no slowing down. This is due to a strong labour market as well as higher interest rates stopping mortgage buyers from buying property. The high rents make a good case for buying a property in the new year. If you’re a cash buyer looking for a buy-to-let investment, there arguably hasn’t been a better time. A slower sales market and record rental prices could make it an ideal opportunity.