In 2024, the London housing market will experience another dynamic year, with several key trends expected to influence its trajectory. While the following insights are guidelines, it’s important to keep in mind that real market conditions may deviate from these projections. Nonetheless, this information can assist buyers, sellers, landlords and investors as they navigate the changing landscape of London’s property market.
London Housing Market Predictions:
1. Robust Economy and Demand
As per the Centre for Economics and Business Research, London’s economy is anticipated to grow by 2.5% in 2024.
Rising interest rates and the cost of living crisis could dampen demand for housing. However, London’s economy continues to rank among the world’s most formidable, attracting affluent individuals and investors from around the globe. In 2024 this could still put pressure on property prices, therefore supporting an environment ripe for investment.
2. Scarcity of Supply
Planning restrictions, high construction costs, and a shortage of land are anticipated to restrict housing availability in London throughout 2024.
The scarcity of housing in sought after areas continues to be a major driving force behind rising property prices. The limited supply is set to intensify competition among buyers, further fuelling this trend.
Are you considering investing in the London housing market? Take a look at what’s available on the market here.
3. Interest Rates
The Bank of England has taken proactive steps to address the issue of inflation this year by increasing interest rates. While this move has caused mortgage rates to climb, rendering home purchases more expensive, it has also raised concerns about affordability for many prospective buyers. Looking ahead, many anticipate that The Bank of England will keep these interest rates unchanged in 2024. This should make it more feasible for individuals to secure loans for their home purchases.
However, it’s crucial to acknowledge that current interest rates are notably higher than those in previous years, and there remains a potential for further increases in 2024. If you are contemplating buying a home in London during the upcoming year, we strongly advise consulting with a financial expert to assess the possible ramifications of interest rates and other economic factors on your financial capacity.
4. Emergence of the Buy-to-Let Market
London’s buy-to-let market is on the rise as more individuals invest in properties for rental income rather than personal occupancy. According to the National Residential Landlords Association (NRLA), the average rent in London increased by 7% in the year leading up to March 2023. As this is higher than the rate of inflation, this means that the real cost of renting a property in London is rising too.
Factors like escalating housing costs and surging demand for rental accommodations propel the buy-to-let trend. However, the escalating rent prices in London indicate tenants will face continued pressure to afford housing costs in 2024. This not only strains financial stability but can hamper abilities to save for future investments, particularly in purchasing a home. For those aspiring to enter the property market, the importance of exploring suitable mortgage options that align with financial goals is key.
5. Rise of Co-Living Spaces
Co-living, once a novel concept, is becoming increasingly popular in London, particularly among young professionals and students. It involves shared living arrangements in larger, more cost-effective homes or apartments, offering an alternative to traditional renting. Essentially, this trend appeals to those seeking affordability without compromising on quality.
Several factors, including the rising cost of living, the desire for a more social living environment, and the convenience of having all bills and utilities included, contribute to the growth in co-living habits. According to Colliers International, the co-living London market is expected to reach £1 billion by 2025.
As workers returned to the office in 2023, the demand for small pieds-à-terre also surged. We discuss this trend and its implications here.
6. Sustainability Takes Center Stage
Sustainable living is becoming a top priority for London’s homebuyers. Studies show they are increasingly inclined towards sustainable homes, prompting developers to focus on constructing energy-efficient and eco-friendly properties. According to a recent survey by Rightmove, 67% of UK homebuyers said that sustainability is important to them when choosing a property.
London landlords must stay on top of this too. The Energy Performance Certificate (EPC) is a key tool in this process and landlords should pay close attention to the latest EPC legislation and how it might impact their property. If you’re a landlord and want to understand what the EPC is and what you need to do in 2024 in respect of this, check out this article.
Beyond these above trends mentioned, other factors like the surge in remote work, the enduring impact of Brexit, and the development of new infrastructure projects will also shape the London housing market in 2024.
What are Implications for Buyers, Sellers and Landlords?
For Buyers:
To succeed in the competitive and fast-paced London housing market, preparation and decisiveness are key. Conduct thorough research and secure mortgage pre-approval before commencing your property search. Act swiftly when you find the right opportunity.
For Sellers:
Competitive pricing and meticulous property maintenance are vital for sellers. Additionally, market your property broadly to reach a wide spectrum of potential buyers, including investors and co-living companies.
For Landlords:
To maximise your rental income, stay informed about the current rental trends and pricing in your area. Regularly update your property to meet the market demands, ensuring it remains attractive to potential tenants. Additionally, consider the benefits of professional property management services, such as Rickman Properties, to handle the complexities of the rental process, enabling you to focus on maximising your property’s potential income. Keep a keen eye on changing regulations and tax policies to make informed decisions about your investments, safeguarding your financial interests in the dynamic real estate landscape.
In Conclusion
The London housing market is anticipated to maintain its strength throughout 2024. However, the evolving landscape includes various trends and factors that may influence its direction. By staying well-informed and making data-driven decisions, buyers and sellers can position themselves for success in this dynamic real estate environment.
Need help navigating the London property market? Please contact us today on 0207 937 9777 or email us at info@rickmanproperties.com.
