In the face of falling inflation rates and changing interest rate expectations, Knight Frank’s head of UK residential research, Tom Bill, expects property prices to grow by 3%. According to him:
“In October, financial markets were pricing in a single interest rate cut of 0.25% by the end of 2024. By the end of last week, they were expecting five.
“The main reason for this changing outlook is that inflation is falling faster than expected. As a result, mortgage lenders have dropped their rates fairly significantly in recent weeks, partly to win business in a low-volume market.
“The best five-year fixed-rate mortgage is now under 4%, which was made possible after the five-year swap rate fell a full percentage point over the final quarter of 2023.
“Data from Halifax and Nationwide certainly suggests a corner is being turned. While the former reported a 1.7% increase in 2023 and the latter posted a fall of 1.8%, that compares to a 5% decline that both identified in August.”
However, property growth in the London market is expected to be less than the national average, only reaching 2% due to the continued cost of living constraints. Those affordability issues may push buy-to-let investors to consider property purchases further afield.
Savills recently revealed that the North West buy-to-let market would see returns of 9.2% in 2024, which may tempt southern landlords to invest in the northern housing market in search of the best property investment opportunities.
Knight Frank also said property growth should reach 20.5% between now and 2028 – a marked improvement from previous forecasts.
Read more: If you’re looking for information on how to make money from property, read our guide on how to build a property portfolio.
