A look back on 2023 and a look forward to 2024

Posted on: 21 December 2023

A look back on 2023 and a look forward to 2024

A Christmas Message

Merry Christmas and Happy New Year from all the team at Living in London!

Living in London had yet another ‘challenging year’, something which is starting to become the new norm for us, but as ever, we try to relish the challenges as best we can, keep as positive as possible and continue to do all we can to deliver the best service we are able.

The team has continued to grow, we have yet again picked up a number of prestigious industry awards, of which we are very proud, and we are now also partnered with a market leading Real Estate agency in Dubai, so we have access to all the best developers and developments throughout the whole of Dubai in which to buy/invest.

As always, we wouldn’t have had the success we have without our hard working and dedicated team or the amazing and loyal clients we have, some of whom we have been working with for more than 20 years!

Our deepest thanks!

We wish you and yours health, wealth, peace and prosperity for 2024 and beyond, and look forward to speaking, seeing and working with you in the days, weeks and year to come.

 

At this time of year, we like to take a quick/brief look back on the year that passed, and look ahead at the year to come.

Sales Market

There is one word that best describes the sales market in 2023 – resilient.

Despite the gloomiest of predictions from many commentators, there was no property crash despite various obstacles such as the financial crisis sparked by the Truss-Kwarteng mini-budget that prompted a turbulent end to 2022.

Nevertheless, the hangover created an economic environment of sticky inflation and consequently high interest rates which, taken together, encouraged many buyers to ‘sit tight’ while they waited for conditions to improve.

Despite this, 2023 gradually worked its way to be better than predicted with successful sellers pricing competitively to attract determined and often savvy purchasers.

Pent-up demand continued to rise though the year and, gradually, more positive economic signs began to appear as inflation held steady at 6.7% between August and September before falling to 4.6% in October. And in November, the Monetary Policy Committee of the Bank of England held the base rate firm at 5.25% after 14 consecutive rises.

Mortgage rates began to ease as a result and in November, Nationwide introduced a sub-5% rate for 2 and 5 year fixes which was widely seen as a ‘watershed’ move with other lenders soon following.

If this trend continues, the pent-up demand that has been building throughout 2023, may create a sudden surge in active buyers which could, in turn, lead to an increase in prices as the year nears 2025, or at the least an increase in transactions.

Smart buyers may well want to get into the market ahead of the curve, and Chancellor Jeremy Hunt gave first time buyers in particular a boost in his Autumn statement by knocking 2% off the employee national insurance rate – helping them with tough mortgage affordability criteria. Although predicted cuts to the Stamp Duty Land Tax did not materialise, he did announce an 18-month extension to the Mortgage Guarantee Scheme until the end of June, 2025.

Our area sales manager, Elizabeth Miller, commented;

“As is often the case in the resilient area in which we operate, we didn’t witness a crash, but rather a ‘stand-off’, ‘waiting period’ at the beginning of the year as people stood on the sidelines waiting to see where the markets would go, many hoping for rates to fall sooner than they did.

Once the initial prolonged period of waiting became too much for the most determined of buyers, we saw pockets of heightened activity, generally in line with and around the times when the more desirable and well-priced properties came to market. More buyers emerged as the year went on and although it definitely wasn’t the busiest of sales markets we have witnessed, there was constant activity throughout the year, more so as the year went on.

We expect this trend to continue into the New Year and throughout 2024.

Although the sales market as a whole will always play a considerable factor, buying and selling a property is a very individual and personal transaction and peoples individual wants, needs and desires will always play as much of an important role.

A desirable and well-priced property will always buck the trend of the market.” 

We are cautiously optimistic about the 2024 sales market, especially as we have some exciting opportunities and new developments such as Park Avenue Place, the eagerly awaited Canada Water Master Plan development, and a pipeline of properties due to come to market when the timing is right, so we’re confidently looking forward to the year ahead.”

 

What about rentals in 2024?

The Private Rented Sector suffered further in 2023 as more and more landlords followed the trend of the last few years and left the market. This was/is due to the prospect of even further regulation at the hands of the Government. The long-awaited Renters (Reform) Bill – widely seen as anti-landlord legislation - was finally introduced in May and had its Second Reading in October. However, perhaps its most controversial measure – the abolition of Section 21 (so-called ‘no-fault’) evictions – was paused until plans to improve the courts process have been successfully implemented.

High interest rates for buy-to-let mortgages put pressure on existing landlords and discouraged new ones from entering the market. Meanwhile the chronic shortage of available accommodation and the high demand from prospective tenants forced rents up all over the UK by an average of 9.56%, according to the Homelet Rental Index for October.

As the Renters’ (Reform) Bill progresses through Parliament, where it will be subject to scrutiny and amendment, it is to be hoped that Government listens to industry experts about what action to take to halt the cycle of landlord sell-ups and rising rents that are so damaging to the sector.

Until that happens, it is difficult to see an end to rent rises next year although Government action to tempt more first-time buyers out of rented properties and into the property-owning market might go some way towards alleviating the situation. Some commentators have argued that Chancellor Hunt’s Autumn Statement could have done more in this regard limiting his measures to a minimum wage rise, the national insurance cut for employees and further adjustments for the self-employed.

It is widely predicted that supply shortages are likely to continue next year and rental growth will outpace wage growth - Zoopla forecast a rental increase of 5-6% throughout the UK in 2024. But the Bank of England has said that if inflation continues to fall, base rates will decrease alongside. If mortgage rates follow suit, more tenants will be tempted into the buyers’ market which will ease pressure on supply.

Elizabeth Miller noted the picture locally reflected the national trend.

“It is almost unbelievable that the government have let the situation with the Private Rental Sector reach where it is today. They seem determined to do all they can to force small and single property portfolio landlords out of the market. With all the taxation and regulation changes that have been implemented it is no wonder we are now witnessing the biggest demand to supply disparity that we at Living in London have ever witnessed. This has unexpectedly lead to a huge rent rise, which might seem like a good thing to some landlords, but these rental levels are a real stretch for many tenants and aren’t sustainable for all. We unfortunately can’t see anything other than further increases in rents unless the government steps in, not by capping rents which will lead to more landlords leaving the market, but by encouraging more landlords to come back to the market so to increase the supply. There are many obvious ways in which this can be done, but we are sure the government are acutely aware of what all of these are! ”

New developments, residential and commercial that are planned for Canada Water and the surrounding area, will no doubt attract more people, and so we expect the market to remain buoyant. We hope as well as the increase in demand, there will also be an increase in rental supply so to keep a balance,.”

 

In conclusion

As the door closes on 2023 there are some positive signs for 2024.

The Government hit its inflation target which now stands at 3.9% and it is to be hoped that if mortgage interest rates are allowed to fall further, some of the pent-up demand will find its way to the market. Sellers will feel more confident in bringing their properties to market and the number of transactions will continue to rise.

Demand for rental properties will remain high and rents will continue to rise although perhaps more slowly if landlords feel the benefit of falling buy-to-let mortgage rates and more would-be homeowners find themselves in a position to buy.

Here at Living in London we are looking forward positively to a bustling start for the property market in the year to come and we look forward to working with new and established clients whatever the future may hold.

If you are looking to sell or buy in 2024, or maybe you just want some professional advice from a 5-star rated, multi-award winning agency, please get in touch on 0207 231 0002 or email welcome@living-london.net

You can also get an instant online valuation of your property by clicking here.

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