1. House Prices: Slower Growth but No Crash

Current Trends:

• Slower price growth: While house prices have continued to rise in many parts of the UK, the pace of growth has slowed compared to the highs seen in 2021 and 2022. Factors like rising interest rates and the cost of living crisis have contributed to cooling demand, especially among first-time buyers.
• Regional differences: The South East and London have seen more modest price increases compared to regions like the North West and Midlands, where affordability remains more attractive to buyers.

Predictions:

• Modest price increases: Property experts predict that house prices will continue to grow, but at a much slower rate. In some areas, prices may even plateau as buyer demand softens.
• Potential price correction: While a market crash is unlikely, there could be minor price corrections in areas where property values have soared rapidly, particularly if interest rates remain high.

2. Rising Interest Rates and Mortgage Affordability

Current Trends:

• Higher mortgage rates: Mortgage rates have risen significantly, making borrowing more expensive. This has had a cooling effect on buyer demand, particularly for first-time buyers and those looking to upsize.
• Impact on affordability: As interest rates rise, the amount people can borrow decreases, which has impacted affordability and reduced the number of buyers able to access the market.

Predictions:

• Continued rate increases: The Bank of England may continue raising interest rates in 2024, which could further dampen buyer demand. However, rates are expected to stabilise toward the end of the year, providing more certainty for buyers and sellers.
• Buyers may wait: Some buyers may delay their property purchases in the hope that mortgage rates will drop in 2025, while others may opt for smaller or cheaper properties to manage higher borrowing costs.

3. Increased Demand for Energy-Efficient Homes

Current Trends:

• Energy-efficient upgrades: Sellers are recognising the need to make energy-efficient upgrades, such as double glazing, insulation, and energy-efficient boilers, to attract buyers. Homes with better Energy Performance Certificate (EPC) ratings tend to sell faster and for higher prices.
• Eco-friendly new builds: Many developers are focusing on eco-friendly new builds, which appeal to buyers looking for sustainable living options. These homes often feature solar panels, heat pumps, and smart home technologies.

Predictions:

• Stricter regulations: The government is likely to introduce stricter energy efficiency regulations in the coming years, meaning properties with poor EPC ratings could face lower demand or even reduced saleability.
• Green mortgages: Lenders may offer more incentives, such as green mortgages, for buyers purchasing energy-efficient homes, further driving demand for eco-friendly properties.

4. Regional Growth: The Rise of the North and Midlands

Current Trends:

• Northern Powerhouse: Cities like Manchester, Liverpool, and Leeds have seen substantial investment in infrastructure, making them attractive hubs for both businesses and residents. As a result, these cities have experienced significant house price growth.
• Midlands regeneration: Areas like Birmingham and Nottingham are also benefiting from regeneration schemes, new transport links, and business growth, making them appealing to both homeowners and investors.

Predictions:

• Continued regional growth: Northern and Midlands cities are expected to continue outperforming London and the South East in terms of house price growth, as they offer better value for money and opportunities for capital appreciation.
• Increased investment: Investors are likely to focus on these regions due to lower entry costs and higher rental yields, making them a more attractive prospect compared to the more saturated London market.

5. The Changing Role of Cities and Remote Working

Current Trends:

• City centre living: While some buyers moved away from cities during the pandemic, demand for city centre living is slowly rebounding as people return to the office part-time. Younger professionals, in particular, are once again drawn to urban living for its convenience and lifestyle benefits.
• Suburban appeal: Despite the resurgence of city centre living, suburban areas remain popular, especially for families seeking larger homes and green spaces. The flexibility of hybrid working means many people no longer need to live close to their workplace full-time.

Predictions:

• Hybrid living: The hybrid working trend is here to stay, meaning demand for both city centre and suburban properties will continue. Buyers will prioritise properties with home office space, good transport links, and proximity to amenities.
• Smaller city flats: As more people adopt flexible working arrangements, smaller city flats may become less attractive to long-term buyers. However, they could remain popular with younger renters who prioritise location over space.

6. Rental Market: High Demand, Low Supply

Current Trends:

• Rental price growth: Rental prices have surged across the UK, particularly in London and other major cities, where demand far outstrips supply.
• Supply shortages: Landlords exiting the market due to increased regulation and tax changes have contributed to a shortage of rental properties, further pushing up rents.

Predictions:

• Tight rental market: The rental market is likely to remain competitive throughout 2024, with high demand and limited supply keeping prices elevated.
• Build-to-rent developments: To address the housing shortage, more build-to-rent developments are expected to come onto the market, providing renters with purpose-built, high-quality accommodation.

Final Thoughts