The UK property market continues to be a dynamic and ever-changing landscape, and 2024 is no exception. As we look towards the end of the year and into 2025, understanding the forecasted trends in house prices is more crucial than ever for investors. With regional variations in house price growth, changes in economic policies, and a surge in rental demand, choosing the right city for property investment is key. In this article, Magnate Assets explores the UK house price forecast and provides insights to help investors navigate this landscape effectively.
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After the turbulence of recent years, the UK property market is set to experience moderate growth between 2024 and 2025. Here’s what investors can expect:
The UK economy continues to be influenced by inflation, high interest rates, and the ongoing cost-of-living challenges. The Bank of England's recent interest rate cut from 5.25% to 5% may help increase demand and improve mortgage affordability. While mortgage affordability remains a challenge, rate stabilisation by late 2024 could restore confidence in the market, leading to modest price increases in 2025.
The UK housing market shows clear regional differences. Cities in the North and Midlands, such as Manchester, Birmingham, and Leeds, have consistently outperformed London and the South East. This trend is expected to continue, with these cities forecasted to see annual house price growth between 3% and 6%, driven by strong local economies and regeneration projects. London, although seeing slower growth, remains a strong option for long-term capital appreciation, particularly in outer boroughs where prices remain more affordable.
A persistent housing shortage remains a significant driver of house price growth across the UK. The government’s goal of building 300,000 homes annually has consistently fallen short, particularly in regions with fast-growing populations. This supply-demand imbalance is expected to push prices higher in key UK cities.
For buy-to-let investors, the rental market remains highly attractive. With homeownership becoming more difficult due to high interest rates, demand for rental properties will stay strong. Cities like Leeds and Liverpool offer rental yields upwards of 6-7%, making them particularly attractive for investors looking for strong returns despite rising mortgage costs.
As we approach the end of 2024, the UK property market is expected to remain stable. Forecasts range from modest price increases to slight declines, with Savills predicting a 3% fall by year-end, while Knight Frank forecasts a 3% rise. Factors such as inflation, interest rates, and government housing policies will continue to influence these trends.
Here are the top UK cities investors should consider for property investments over the next two years:
a. Manchester: A leader in economic growth, driven by its thriving tech sector and high demand for housing.Looking beyond 2025, the UK property market is forecasted to continue its steady growth, particularly in regional cities offering better affordability than London. Ongoing government initiatives like the Levelling Up agenda, investment in infrastructure, and a focus on sustainability will likely drive above-average price growth in the North and Midlands over the next five years. Investors focusing on areas with robust economic fundamentals, growing populations, and solid infrastructure are well-positioned for capital appreciation and rising rental yields.
At Magnate Assets, we understand that navigating the UK property market can be complex. If you're considering investing in UK property, our expert investment consultants are here to guide you through every step. Contact us to learn more about how we can help you maximise your returns in the dynamic UK property market.