London's Property Market Poised for Growth in 2024
Published by Magnate Assets on
Dec 26, 2023
London emerges as a beacon of resilience and potential in a landscape where UK house prices are anticipated to dip. Chestertons, a prominent real estate agency, projects that the English capital will lead to a slow recovery in property prices in 2024, defying the broader downward trend predicted by significant mortgage lenders like Nationwide and Halifax.
The nationwide consensus suggests a potential 2-4% decline in the average UK property value, primarily driven by soaring interest rates impacting mortgage affordability and sales completions. However, Chestertons holds a contrasting view, forecasting a modest 1.8% growth in London.
The key differentiator lies in the prevalence of cash buyers in London, a segment less affected by the recent higher interest rates that have dampened the market. As the cost of borrowing increased and fewer people opted to move, house prices in the UK witnessed a dip of -2% in London and -3% across the country by the end of 2023.
The pivotal factor influencing this market cooldown has been the series of interest rate hikes by the Bank of England, which transitioned the base rate from 0.1% to 5.25%. The era of ultra-low interest rates that fueled house price growth over the last decade has concluded.
However, Chestertons foresees a shift in this scenario as the Bank of England projects minor interest rate cuts in 2024 (to 5.1%) and 2025 (to 4.5%). These anticipated reductions are expected to create a conducive environment for the property market to recover, mirroring the downward trajectory of mortgage rates.
Despite the optimism, the overall economic outlook remains subdued, with stagnant economic growth and slowly increasing unemployment. The added uncertainty of a potential General Election in the coming year introduces an additional layer of complexity, especially for the upper echelons of the property market, which is sensitive to changes in tax rules.
Looking ahead, Chestertons projects a slight decline of -0.3% in UK house prices in 2024. However, London stands out with a predicted growth of 1.8%, underlining the resilience and appeal of the city's real estate landscape. The prospect of a marginally stronger economic outlook from 2025 could usher in a more meaningful uplift, with forecasted growth ranging between 3.5% and 4.5% across London and the UK.
While the pace of growth is expected to be slow and steady rather than spectacular, these projections indicate that London's property market is well-positioned to navigate the complexities of the evolving economic landscape, presenting strategic investment opportunities in the year ahead. As we anticipate the unfolding property market dynamics, London remains a focal point for investors seeking long-term gains and stability.