As we step into the new year, the real estate market continues to be a dynamic and ever-changing landscape. 2023 brought its own set of challenges and opportunities, shaping the expectations for what lies ahead in 2024.
The big question is – what happens next?
- Interest rates – High interest rates have been a challenge for many in 2023 and, whilst interest rates are likely to remain high into the early part of 2024, the plus side is that they seem to have peaked. This means that rates are likely to remain stable, with many now accepting the higher interest rates.
- Property prices – We are hopeful that property prices will not drop as low as in previous years. For example, Halifax predicted that in 2023 house prices would fall on average by 8%. However, this year, their prediction is that house prices will fall between 2%-4%. The upshot being that it is very likely that both buyers and sellers alike will find that they will adjust to what will become the new normal over the course of the year. For purchasers, this may mean accepting the current interest rates on offer when entering into mortgages. Whereas for sellers the new normal may well be accepting an offer slightly lower than what they had anticipated. With revised expectations, we are hopeful that this may be enough to kickstart the housing market once more, allowing those wanting to get onto the property ladder to purchase more easily.
- Increase in Green mortgages – With energy efficiency and sustainability becoming increasingly important for home buyers, it is likely that we will see an increase in the popularity of Green mortgages. The idea is that, if you’re moving into an energy-efficient home or making your property ‘greener’, your lender will reward you for that with a more favourable interest rate or cashback on your mortgage. There are conditions that need to be complied with, so it’s important that you do your research and speak to a property lawyer before considering whether to go down this route.
- Leasehold changes – Following the King’s speech, the Leasehold and Freehold Reform Bill was introduced. This will see fundamental changes made to leasehold ownership, with the aim being that leaseholders will be given greater rights and powers. The Leasehold and Freehold Reform Bill may well pass into law before the next general election. Until this bill is passed, we do not know fully how leaseholders will be impacted so, for now, we will continue to do everything we can to support our clients under the current regime, but we will be keeping a close eye on developments.
- The upcoming UK general election holds the potential to impact the housing market, influencing individuals’ decisions to buy and sell properties. With the Spring Budget set for 6 March and with speculation that tax and housing will be high on the agenda, we will again be keeping a close eye on what the government decides to do on these issues and what this will mean for buyers and sellers. Watch this space…
In summary, the ongoing cost-of-living crisis, mortgage rates and even the general election will all play a part in the property market this year but one thing is certain – the outlook for 2024 looks more positive than this time last year. The property market in England and Wales is far more resilient than anyone ever expected and, whilst unexpected challenges are inevitable, we are optimistic that 2024 will bring far calmer market conditions.
For further information please contact Tejal Amin or another member of our Residential Real Estate team.