With so much uncertainty ahead, international turmoil and a looming election, the housing market in London and its surrounding counties could justifiably be characterised as ‘chaotic’. Add to that the high interest rates and rent that only ever seems to go up, and it can all look gloomy. But there are some threads of promise because 2024 has been identified by more than one commentator as a good year to buy. This is partly because, though the supposed ‘crash’ never seems to materialise, there is anticipated to be a fall in prices over the coming year. And some experts are suggesting that when the election does take place, the ensuing upheaval will prompt a further slash in asking prices.
According to an Evening Standard report issued in January, it’s at the end of the year that there is likely to be a “sweet spot” for buying, thanks not only to the fall in prices but also to an anticipated lowering of interest rates. This partly relies on their being an autumn general election which is, of course, still not conclusively known.
And, naturally, there are aggravating factors that could upend that prediction. Already, there is talk that, rather than falling consistently through the year, there will be a bump (or “mini-recovery” as some commentators have called it) as early as spring. Owing to an anticipated cut in base rates by the Bank of England, combined with a predicted fall in inflation excepted to hit by April, there’s been a rush of new, appealing mortgage deals and this, in turn, could indeed cause a semi-recovery of house prices before the first quarter of the year is over.
How Much Will House Prices Change in 2024?
At the end of last year, estate agents, such as Knight Frank, were publishing house price forecasts that suggested a four per cent drop across the capital in 2024. That was before the spring mini-recovery predictions came in. Still, even taking that into account, house price growth is expected to be more sluggish in London than in the rest of the country. This slow growth is exacerbated by the already-high property values in the city and then compounded by rents so high they swallow up all the income of renters who might otherwise consider saving for deposits. Currently, predictions suggest a four per cent fall for properties in London (preceded by a two-to-three per cent rise in the spring mini-recovery). In the Home Counties, the mini-recovery could spur as much as a four per cent rise, before a tailing off/fall at election time.
Is 2024 a Good Year To Buy a House?
Few questions are asked more than “Is it a good time to buy a house?”. But rarely can the answer be totally unequivocal. The mortgage world has been through a bumpy ride in 2023, with the effects of the Truss-Kwarteng 2022 mini-budget still being felt. However, the drop in inflation in November 2023 has slightly lessened the cost of borrowing. Across the country in 2023, there was a significant drop in the number of properties sold; the high mortgage rates dampened the potential activities of both first-time buyers and home-owning movers. At the outset of 2024, HSBC was the first of the high street lenders to lower its mortgage deals and it’s widely tipped that its rivals will continue to follow suit. But the picture is mixed, with the economy teetering on the edge of recession, combined with still-elevated interest rates and the cost-of-living crisis.
Nevertheless, Home & Property are calling 2024 a year to buy. And Zoopla’s research indicates that asking-sprice discounts in London and the Home Counties are approaching 6.1 per cent (compared to 2.1 per cent in 2022). This equates to the best conditions London buyers have been able to take advantage of for several years, with sellers more open to negotiation in order to bag a sale.
When an election comes, it usually prompts overseas buyers to press pause while having less appreciable effect on domestic buyers. This time, however, it’s not necessarily expected to be a “normal” election. This is partly because the polls are emphatically indicating an entire change of government and also because this election will take place amid great economic uncertainty. So while the spring market looks hopeful for sellers (and certainly better than the 2023 spring market), the autumn one, possibly subject to a cut in asking prices, will be better for buyers.
Where To Buy in London in 2024?
If you’re looking for value, the only part of inner London that ended up on the Top Ten Areas for House Price Falls in 2023 was Southwark, with a 2.5 per cent fall, resulting in an average price of £513,900. The biggest faller overall in the capital was Croydon, at 3.4 per cent and where the average house costs £396,700. Only three other boroughs have averages beneath £397,000. For buy-to-let searchers, areas tipped by Foxtons to make good investments include Bollo Lane in Acton (thanks to significant regeneration plans), Pimlico, Wembley (where regeneration is already coming to fruition), Hackney, Elephant & Castle, King’s Cross (a true regeneration success story) and Chelsea.
Renting in 2024
Generation Rent is still far from being out of the woods, but the rises are expected to cool a little in 2024, increasing a possible two per cent through the year (this is compared to a drastic nine per cent rise seen by Zoopla last year). So while there is a slender thread of hope for renters, rent increases are still likely to outpace pay increases, with ongoing pay stagnation still stretching affordability. The situation is worsened by the shortfall in new property building and the rise in the number of people looking to rent. With house prices at least eight times higher than incomes, it’s hard to see how things will change to the advantage of renters.
And What is the London Real Estate Market Forecast for 2025?
With the housing market proving more resilient than was expected, despite the fluctuations expected in 2024, it’s 2025 when steady rising will begin again, possibly by four per cent, with another four per cent to follow in 2026.