Monthly Property News – November 2023

November is coming to an end – Christmas lies on the horizon, and New Year’s Day is a matter of weeks away. But what has happened to the UK property market in the penultimate month of 2023? In November’s Monthly Property News, we’ll take you through the main things you may have missed this month – from the contents of the King’s Speech to parliament, the latest predictions from Savills, and the latest rental trends.

The King’s Speech To Parliament

In his inaugural address to Parliament, King Charles unveiled a comprehensive agenda encompassing diverse reforms set to shape the UK in 2024. The speech covered significant changes affecting the property market, including empowering leaseholders to buy freeholds or extend leaseholds, increasing mixed-use ground rent thresholds, capping ground rent costs, and eliminating ownership duration prerequisites for freehold ownership. The monarch also addressed Renters Reform, proposing a Leasehold and Freehold Bill to elongate leases, introduce peppercorn ground rents, and prohibit new leasehold houses.

Crucially, King Charles acknowledged the pressing issue of inflation and pledged government efforts to alleviate the cost of living crisis, anticipating a subsequent downturn in the Bank of England base rate that could make mortgages more affordable, provided housing supply expands. Notably, the speech highlighted Renter’s Reform, emphasising court reforms before abolishing Section 21, while maintaining provisions against discrimination, introducing a new Ombudsman, and standardising periodic tenancies.

Additionally, the monarch addressed the scrapping of HS2’s northern leg, redirecting funds to improve northern and Midlands journeys. The Draft Rail Reform Bill, a pivotal aspect of the government’s plans, aims to enhance rail travel by creating a Great British Railway agency, focusing on pricing, private franchise management, and punctuality. These initiatives collectively promise a more reliable, connected Britain, influencing housing dynamics by making smaller towns and villages attractive to commuters and alleviating pressure on major cities.

The Worst Is Behind Us

This month, Savills have forecast that the UK property market is past its ‘peak pain’ and is predicting a 3% drop in average house prices for 2024 after a 4% decline this year. This bodes well for buyers, especially first time buyers, as property purchase prices will continue to become more affordable over the next year, whilst also spelling good news for property investors looking for a return to normal, as after 2024 prices are set to re-stabilise.   Property values are estimated to have decreased by a total of 7% since the autumn of the previous year until the end of 2023. The estate agency anticipates the Bank of England to commence interest rate cuts in the latter half of 2024, with rates projected to reach 4.75% by the year-end. Despite the central bank’s indication of prolonged high-interest rates to combat inflation, Savills expects a gradual reduction, forecasting a return to house price growth of 3.5% in 2025, rising to 5% in 2026, and 6.5% in 2027 before slowing to 5% in 2028.

Savills suggests the housing market is approaching the end of its cycle, with London and the southeast experiencing greater price falls in 2024 due to larger deposit requirements and increased borrowing relative to income. However, London is expected to lead in price growth from 2028, driven by population pressures and a stronger economic outlook. Prime central London property is projected to avoid price falls in 2024, with the average luxury London property potentially gaining £800,000 over the next five years. Birmingham is also set to see impressive growth in the next few years, with JLL predicting a 19.2% cumulative house price growth anticipated between 2023 and 2027.  

The housing market currently grapples with challenges, including higher interest rates and affordability pressures, resulting in a cautious approach among sellers, leading to a short-term strengthening of prices. We can expect to see more property purchasers taking out long-term mortgages in the near future as the property market stabilises and trust in the market strengthens.

Want to learn more about what 2024 and beyond could spell for the property market? Be sure to check out the latest Property Market Predictions here.

Rental Demand Continues To Soar

Demand for rental properties is 27% above the 5-year average, with the average UK rent for new lets rising 10.1% over the past year to £1,166 per month. This marks the 20th consecutive month of rental inflation exceeding 10%. 

Renters staying in their current homes experience slower year-on-year increases at 5.7%, according to the Office for National Statistics. In Scotland, the highest rental inflation in the UK is at 12.8%, with rents in cities like Edinburgh and Glasgow growing at 16.6% and 13.4%, respectively. In southern England’s expensive cities, including London, rental inflation has slowed, decreasing from 17% a year ago to 10.4% today. 

The trend extends to coastal communities, such as Hastings and Newport. Faced with rising rents, renters are considering smaller homes, moving to cheaper areas, or sharing properties to reduce costs. The rental market is expected to maintain inflation above 9% for the rest of the year, with national growth of 5-6% anticipated in 2024, particularly in cities. You can find out more about what 2024 may hold for the lettings market by exploring the latest Lettings Market Predictions here.

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At Centrick, we aim to keep you informed no matter what stage you are at in your property journey – whether you’re a landlord or a tenant, an investor or developer, a buyer or a seller. Want to stay informed about the latest property market updates? Be sure to check back on our News and Insights hub regularly for the most up-to-date property information to stay ahead of the curve. For more detailed queries about our monthly property news, feel free to contact the team via the form below – we’re here to help!