Chestertons’ Research Analyst David Rees summarises property market changes over the last quarter in Chestertons Sales and Lettings Report:
Interest Rate Reduced
The Bank of England reduced interest rates from 5.25% to 5% in August, following a period of stable inflation around the Bank’s target rate of 2%.
This move has lowered mortgage rates, some are now under 4%, and coincides with a new Labour government that plans significant reforms in housing, including the abolition of Section 21 evictions and strengthening renters’ rights.
London House Prices have declined
London house prices have been declining for two years, with a -0.9% decrease between March and May 2024, and a -3.0% fall over the past 12 months.
This trend is driven by higher interest rates increasing the cost of purchasing and refinancing, leading to more properties being listed for sale.
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A small recovery in house prices across London and the UK is forecasted for 2024, with stronger prospects in Prime Central London.
The Bank of England may cut rates again, potentially boosting mortgage approvals and sales volumes. However, any price growth is expected to be slow and steady.
More Rental Property Available
The rental market has seen a significant increase in available properties over the past two years, tripling from 11,600 in Q3 2022 to 44,100 in June 2024.
Despite this, rents for new leases rose by 0.2% in London and 1.0% in Prime Central London during Q2 2024, with flats experiencing the highest rental growth.
Rents are approaching a ceiling
And with more properties entering the market, rental growth is likely to decelerate further between 2024 and 2026.
