6 Property Trends for 2024 according to Hamptons

In 2023, first-time buyers (FTBs) made up a record 28% of property transactions in Great Britain. Despite higher mortgage rates, many FTBs were able to enter the housing market with help from their parents or grandparents. However, the surge in borrowing costs has priced out many potential homeowners, and it is unlikely that 2024 will bring much relief. Lower mortgage rates will only intensify competition for smaller properties, and the overall market conditions may prevent new purchases. Therefore, 2023 may have represented the peak for FTB purchases.

The majority of new housing developments are now undertaken by private sector developers, meaning supply is dependent on the state of the property market. Due to current conditions and cost pressures, the number of new homes being built over the next 18 months will be significantly lower than in recent years. This shortage of homes, including affordable housing, will keep prices stable in the short term as developers will ensure that homes are not completed faster than they can be sold. However, housing is expected to be a key issue in the upcoming general election, and both major parties may introduce new versions of the Help to Buy scheme under different names.

Baby Boomers, who make up 36% of all households and 56% of homeowners, will play a significant role in the housing market in 2024. As many Baby Boomers own their homes outright or have small mortgages, they can use their equity to downsize. Additionally, they may offer financial assistance to their children and grandchildren to help them get on the property ladder or move into larger properties. Therefore, the influence of Baby Boomers on the market will continue to grow.

Smaller properties, such as flats, have seen faster price increases than larger houses in certain areas. Higher mortgage rates have contributed to the demand for smaller homes, as they are more affordable for buyers with smaller deposits. This trend is expected to continue in 2024. Larger properties, which experienced a surge due to the desire for more space during the Covid-19 pandemic, will likely see price falls. Many households are either choosing to renovate their current homes or opt for less expensive neighborhoods instead of moving to larger properties.

Financial markets predict that interest rates will remain higher for a longer period. This has dampened house prices but led to an increase in rents. Mortgage rates are expected to decrease slightly, but they will likely remain higher than usual, affecting price growth in the medium term. On the other hand, rents are anticipated to continue rising until landlords’ profit margins are partially restored or their expenses decrease. It is projected that rents will increase more than four times faster than house prices over the next four years, which is an unprecedented occurrence in recent market history.

The general election is expected to focus on the center ground, resulting in a modest slowdown in the property market as buyers assess the potential outcomes. However, the uncertainty typically associated with a change of government is not expected to cause a significant slowdown this time. While there may be a new occupant at 10 Downing Street, the current leaders of the major political parties are not radically different ideologically. As more details of their manifestos emerge, any uncertainty should dissipate.

Come and find out the latest PropertyInvestor Trends at the Property Investor Show, 19-20 April 2024, London ExCel