As 2023 comes to an end, we may be seeing some real ‘green shoots of recovery’ on the horizon for the UK economy, as recently released data suggests a more positive outlook for 2024. The final quarter of 2023 is seeing inflation dropping, interest rates peaking and the continuing resilience of the UK housing market.
The inflation rate continues to fall and in October dropped to 4.6%, a two year low, mainly due to lower energy costs. This is the sharpest drop in the CPI (Consumer Price Index) in a single month since 1992. In January 2023, Prime Minister Rishi Sunak pledged to halve the rate of inflation (from an average of 10.7% in the final quarter of 2022) and this has now been achieved.
This in turn means that there is now less pressure on interest rates. In November, the Bank of England kept the interest rate at 5.25% for the second month in a row, after 14 consecutive rate rises, so it seems the ship is steadying but not quite enough to move the needle right now.
Many commentators now expect the Bank of England to reduce interest rates by mid-2024, possibly as early as the spring, so this should bring renewed confidence to anyone planning to buy or sell a property next year.
There is currently a shortage of homes for sale in the UK and this lack of supply is underpinning prices which remain fairly stable.
Prospective sellers are cautious though, concerned they may not achieve the price they had expected. But because of low stock levels, accurately priced properties are generating interest and many are getting good offers quite quickly.
According to mortgage lender Halifax, the average price of a UK property increased by 1.1% in September, the first time prices have risen since March. Nationwide, meanwhile, reported that house prices increased by 0.9% between September and October, the first monthly increase since April and the largest since March 2022.
First-time buyers are keen to take their first step onto the property ladder, often prompted to buy because of the highly competitive rental market and soaring rents. Nowhere is this more apparent than in London.
Domestic homebuyers looking to upsize are more confident now that the wider UK economy is looking stronger, with interest rates and the cost of living appearing more stable. Top mortgage lenders also boosted this confidence by reducing their fixed rate loans to 5% or less in mid-November.
We recently joined forces with Richard Donnell from leading property portal Zoopla to host a webinar which unpacked the Chancellor’s Autumn Statement and its impact on the economy and the UK housing market. There was no big news or anticipated Stamp Duty reform but Richard shared insights regarding how the sales and rentals markets are performing which was very well-informed and demonstrating that London property continues to be a strong asset class.
If you’d like to hear Richard’s detailed analysis of the key facts, watch the webinar here.
Demand from our overseas clients has grown throughout the year, boosted by the continuing weakness of sterling. We’ve seen the launch of many exciting new property developments, including One Clapham Junction, Sterling Place, Hayes Village and Poplar Riverside and these are just some of the developments attracting a lot of interest from investors right now.
Our Directors Anita Mehra and Marc von Grundherr have carried out an extensive programme of visits to our international offices this year.
They’re currently visiting clients and hosting events in Singapore, Bangkok and Malaysia and are being met with a really positive response. Their talks and discussions offer an invaluable opportunity for investors to gain an in-depth insight into the latest London property market trends and advice on optimising property investment returns in the current market.
Property investors are focused on making informed decisions, keen to take advantage of current opportunities in a market that has withstood a couple of difficult years and is now on the cusp of a real recovery.
We’re already planning our international programme for 2024 so if you’d like to reserve a place to meet Anita and Marc during one of their next trips, make you sure sign up to our newsletter.
This year we’ve continued our own expansion programme, opening new branches in Dartmouth Park/Tufnell Park in NW5, Berkeley Group’s Grand Union development in Wembley and The Green Quarter Southall, both in West London.
We’ve also extended our global reach by opening an office in Bangkok which will look after our growing number of investors in Thailand. So, we now have 21 London branches and 14 overseas offices and are planning further expansion in 2024.
Good rental properties are hard to find and in London, we have been averaging 35 applicants per property whereas before the pandemic, we would see around 10 applicants per property.
The Rightmove Rental Tracker reveals that the average advertised rent for properties in London is up to £2,627 per month, quite unaffordable for those on an average salary.
The ongoing lack of supply of rental properties has been underpinning rising rents, which, according to Rightmove, have increased by 12.1% compared to last year.
September, as usual, was our busiest month in terms of rental demand, with many international students and professionals moving to the capital. We too have found the lack of good rental stock a challenge and, although those tenants are now settled in their new homes and rental demand is stabilising a little, demand remains high.
Our East London and City, Nine Elms and Fulham Reach Hammersmith branches continue to see exceptionally high demand throughout the year. Low stock levels in Hampstead, Highgate, Kensington and Knightsbridge have led to waiting lists for well-presented homes, particularly 2 bed flats.
As the new year looms, if you are planning to buy or sell a property or if you are thinking of letting your property in London, please contact your nearest Benham and Reeves London branch for expert advice or get in touch with our international teams so you can talk to someone at your convenience, in your time zone.
We also have a high level of Japanese corporate tenants still looking for homes to rent, so if you can help, please contact our Japan Desk team
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