BuyAssociation’s Group Managing Director, Sam Hadfield, shares his insights into the property market for 2024.
How was 2023 for BuyAssociation?
2023 was our 18th year in business and a year of outstanding growth, in what could have otherwise been a challenging market.
Pressure from interest rate rises, material costs and cost of living pressures brought about some difficult conditions and a much needed correction for the broader property market. Yet, 2023 proved to be a strong year with long-term BuyAssociation investors who hold stock in regional cities, and a window of opportunity for new sales across the regional cities where property prices held and rents increased.
Outside of opening our office in London, one highlight of the year for us has been our involvement in Stockport’s regeneration, where we have brought forward four developments and have even more exciting plans for the future. A quick search on the internet highlights why this location is so exciting. With huge investments into infrastructure, transport links and redevelopment, Stockport is an area which we plan to continue our involvement in.
What trends do you expect BuyAssociation to see for 2024?
According to Nationwide, in 2023 UK house prices fell by 1.8%.
Mortgage approvals fell by a quarter and overall housing transactions fell by a fifth.
With a lot of expert opinions filling your news feed at this time of year, I’ll get straight to the point – 2024 will outperform 2023.
Britain’s housing market is “past peak pain”, a soundbite from Savills, and something that is echoed by our own network of agents and IFAs. Nationwide have in fact now reported house price gains in recent months, which have taken some by surprise.
Yes, we will see more pain in the market for some, as many mortgage products will be moving to higher rates as they mature this year. However, it is widely felt that the bulk of this pain has already been absorbed. Which was the sentiment before news this week of HSBC and Halifax (with more sure to follow) cutting some mortgage deals to less than 4%.
While I feel we are beginning to see the needle move in a positive direction already, I think Frances McDonald, a director in Savills’ residential research team, has a sensible stance when they say:
“We’re expecting the housing market to bottom out in the first half of 2024, because that’s when you begin to see more meaningful cuts to lending costs on the back of Bank base rate cuts.”
I echo this and can see this playing out with increased transactions and pricing in the second half of the year. So, with that said, let’s get into a bit more detail.
Build-to-rent vs the homeowner market
I touched on this last year, it is something that I am passionate about clarifying and encourage everyone to consider when looking at the overall market outlook. UK property can not be lumped into one asset class or property type and the last year has illustrated this very clearly.
The traditional homebuyer and mortgage buyer market faced a lot of challenges in 2023. Transactions were down overall. Despite this, off-plan and build-to-rent projects in key locations really performed well, we saw this first hand at BuyAssociation, and the rental market was very, very strong across almost all locations.
There is nothing in our data, market data or from conversations within the industry that would indicate a decrease in the appetite from ‘generation rent’ and the postgraduate/young professionals towards city centre living. Demand continues to outstrip supply and it is quite reasonable to assume that this asset class will continue to outperform the market across 2024 and beyond, both in terms of sales demand and rental demand.
‘Location, location, location’
The old adage still rings true as the single most important consideration to any purchase. When it comes to being asked about the property market’s potential for the year it is important to differentiate location too. Not everywhere performed the same last year and not everywhere will perform the same this year.
We will see a continued demand for the regions, with regional cities outperforming London.
What is perhaps of more interest is that we will likely see this trend for high-standard and high-amenity, centrally located property stock sprawl out into well connected towns bordering Manchester, Birmingham, Leeds, Liverpool and our other regional cities across the UK. We have seen this with Stockport, Altrincham, Solihull, Preston already.
Finally, after a period of no or slow growth, I think, once the needle does begin to move, 2023’s dip in transactions is likely to be countered with 2024 buyers returning to the market at pace. We know there is pent up demand from both investors and first time buyers. As affordability eases, transactions will follow.
I feel there will be a strong finish to 2024 and believe we will look back at 2023 as a much needed re-calibration of the market and hopefully something that has paved way for a sensible period of slow and steady growth where first time buyers and investors alike can help to support the development of much needed quality accommodation across the UK.
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