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At the close of 2024, the UK property market exhibited notable resilience and growth across various sectors.
Residential Property:
UK house prices experienced a year-on-year increase of 4.7% by December 2024, as reported by Nationwide, indicating unexpected strength despite ongoing affordability concerns. This trend was further supported by the Land Registry, which recorded a 4.9% rise in average property prices between January 2024 and January 2025.
Sales volumes also saw a significant boost towards the end of the year, driven by an increase in property listings and renewed buyer interest. Factors contributing to this uptick included improving mortgage rates, wage growth, and lower inflation levels. Additionally, the Royal Institution of Chartered Surveyors (RICS) reported growing activity in the housing market, with house sales experiencing growth in December and prices rising across all regions. BuyAssociation Group+1Latest news & breaking headlines+1Welcome to RICS
Commercial Property:
The commercial property sector also demonstrated robust performance. According to CBRE's UK Monthly Index, UK commercial property delivered a total return of 7.7% for 2024, surpassing the average annual return of 7.2% recorded since 2000. December alone saw a total return of 1.1%, the highest monthly return for the year, with capital values increasing by 0.6% and rental values rising by 0.5%. CBRE Commercial Real Estate Services
Market Outlook:
Despite these positive indicators, challenges remain. Affordability issues persist, with only 2.5% of private rental homes in England deemed affordable for those on housing benefits in 2024, down from 12% in 2021-22. This decline is attributed to rising rents and a freeze on housing benefit rates. CBRE Commercial Real Estate Services+5Aberdeen Group+5Welcome to RICS+5The Guardian
Looking ahead, analysts anticipate a moderation in house price growth, with forecasts suggesting a 2.5% increase by the end of 2025. Factors such as rising supply and static mortgage rates are expected to temper the rate of price inflation. Zoopla
Overall, the UK property market concluded 2024 on a strong footing, demonstrating resilience amid economic challenges and setting a positive trajectory for the coming year.
Rental Market ended 2024
At the close of 2024, the UK rental market exhibited signs of moderation, with rental growth decelerating from the rapid increases observed in previous years.Cluttons
Rental Growth Trends:
Annual rental inflation for new lets stood at 3.9% in December 2024, marking the lowest rate in three years. This slowdown indicates a shift from the double-digit growth rates experienced earlier, suggesting that the market is moving towards a more balanced state. Zoopla+2charliepanayi.com+2Zoopla+2
Regional Variations:
Rental growth varied significantly across regions. Northern Ireland experienced the highest increase, with rents rising by 10.5% over the year. In contrast, London saw a modest growth of 1.3%, reflecting affordability constraints and a higher base rent level. charliepanayi.com+1Zoopla+1
Supply and Demand Dynamics:
The imbalance between supply and demand began to ease, contributing to the deceleration in rental growth. While demand for rental properties remained robust—31% higher than pre-pandemic levels—the supply of available rental homes showed signs of recovery. However, stock levels were still 18% below pre-pandemic norms, indicating a persistent shortage in the market. charliepanayi.com
Affordability Challenges:
Affordability remained a pressing issue. Since 2021, the average annual rental cost increased by £3,240, a 27% rise that outpaced earnings growth of 19% over the same period. This disparity has led to significant financial strain for many renters, particularly in high-cost areas. Latest news & breaking headlines+2charliepanayi.com+2Zoopla+2charliepanayi.com+3The Guardian+3The Guardian+3
Policy and Investment Landscape:
The rental market also saw increased interest from institutional investors. Private equity firms and pension funds invested over £1.5 billion in UK single-family rental homes by September 2024, reflecting strong demand and ongoing housing affordability challenges. Financial Times
Additionally, policy changes aimed at enhancing tenant protections and addressing affordability issues were introduced. The Renters’ Rights Bill, which includes the abolition of Section 21 no-fault evictions, moved swiftly through the legislative process and is expected to be enacted early in 2025. Cluttons
Outlook for 2025:
Looking ahead, rental inflation is projected to rise by 4% in 2025, with more affordable regions leading this growth. However, affordability constraints are expected to limit rental increases in high-cost areas, such as London and other large cities. Latest news & breaking headlines+2charliepanayi.com+2Zoopla+2
In summary, the UK rental market concluded 2024 with a notable slowdown in rental growth, reflecting an easing of the supply-demand imbalance and heightened affordability challenges. While regional disparities persist, the overall trend points towards a more stabilized market as we enter 2025.charliepanayi.com