Introduction
The UK property market has always been a dynamic landscape for investors and 2024 has been no different. This article will evaluate the UK forecasted house prices heading towards the end of 2024 and into the new year. With regional variations in house price growth, shifts in economic policies, and rising rental demand, understanding the market is more crucial than ever. This article will also provide insights into the key factors’ investors should consider when selecting a UK city for investment.
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UK House Price Forecast for 2024-2025
After the fluctuations of recent years, the UK property market is forecasted to experience moderate growth between 2024 and 2025. Here’s what to expect:
- Economic Conditions and Interest Rates
The UK economy has been under pressure from inflation, high interest rates, and a cost-of-living crisis. The Bank of England has recently cut interest rates from 5.25% to 5% which can create more demand and better mortgageability. Mortgage affordability will remain a challenge for many buyers, but rate stabilisation by late 2024 could bring renewed confidence to the market, leading to modest price increases in 2025.
- Regional Variations
The UK housing market is regionally diverse, with cities in the North and Midlands outperforming London and the South East in recent years. This trend is expected to continue. Cities like Manchester, Birmingham, and Leeds are forecasted to see house prices grow between 3-6% annually due to their strong economies, ongoing regeneration, and increasing demand for rental properties. London, though likely to see slower growth, remains attractive for long-term capital appreciation, especially in outer boroughs where affordability is better.
- Impact of Supply and Demand
The UK continues to face a housing shortage, which will remain a key driver of house price growth in 2024-2025. The government’s target of building 300,000 homes annually has consistently fallen short, particularly in regions with growing populations. This imbalance between supply and demand will likely lead to continued upward pressure on prices in major cities.
- Rising Rental Yields
For buy-to-let investors, the rental market will remain highly attractive. With more people priced out of homeownership due to rising interest rates, demand for rental properties will stay strong, especially in cities with large student populations and growing professional sectors. Investors in cities like Leeds and Sheffield, can expect rental yields upwards of 6-7% in many areas, offering good return on investment even as mortgage costs rise.
UK Property Price Forecast:
UK property prices are set to remain somewhat constant towards the end of 2024. Some Banks and property companies are predicting a growth by 2-3% whilst others predict declines in property prices by 2-3%. Savills predict a fall in prices of 3% by the end of 2024, as are Lloyds Bank, whilst Knight Frank predict a 3% rise. Now we are going to look at the factors affecting this growth or decline in property and what UK cities are best to invest in.
Top Cities for Property Investment in 2024-2025
Based on these factors, here are some cities that investors should consider for property investments over the next two years:
- Manchester: Continues to lead in terms of economic growth and property price appreciation, driven by its thriving tech sector and high demand for housing.
- Birmingham: Set to benefit from the HS2 rail link and ongoing regeneration, Birmingham’s property prices are expected to rise steadily through 2024 and 2025.
- Liverpool: With affordable property prices and some of the highest rental yields in the country, Liverpool remains a top choice for buy-to-let investors.
- Leeds: A key financial and business hub, Leeds is forecasted to see strong house price growth, particularly with the ongoing expansion of its tech and digital sectors.
Scroll down just a little bit further to download our FREE guide to off-plan investing.
Looking Ahead: UK Property Market Outlook Beyond 2025
Looking beyond 2025, the UK property market is expected to continue its steady growth, especially in regional cities that offer better affordability than London and the South East. With ongoing government initiatives such as the Levelling Up agenda, investment in infrastructure, and a focus on sustainability, the North and Midlands will likely see higher-than-average price growth over the next five years.
Investors who focus on areas with strong economic fundamentals, growing populations, and good infrastructure will be well-positioned to benefit from both capital appreciation and rising rental yields.
Next steps
Investing in rental property can be a difficult decision to manoeuvre but here at E.R.E Property, we are here to help. If you interested in investing in UK property, call us on +44 (0) 113 380 8930 and speak to one of our expert investment consultants.
