Property market update: Mixed fortunes for the housing market as rents continue to surge

Autumn usually brings a monthly house price increase but October 2024 has seen more restrained growth. Rightmove reported that the average new seller’s asking price only rose by 0.3% (+£1,199). However, despite the smaller rise, buyer activity surged, with 29% more sales agreed compared to last year’s sluggish market.

This increase in buyer interest is further reflected in the 17% rise in people contacting estate agents about purchasing homes. Moreover, there has been a 12% rise in the stock available per estate agent compared to a year ago, the largest growth in a decade. With two potential bank rate cuts on the horizon and wages expected to outpace house price inflation, 2025 looks good to be an active period for the housing market.

House price growth highest in two years

While October’s price growth may seem modest, it follows a pattern of sustained growth over the past two years. Average house prices have increased by 3.2%, supported by higher wages and the lower cost of borrowing. Buyers and sellers alike are returning to the market after a period of uncertainty, spurred on by better economic conditions.

Mortgage approval levels have been strengthening for much of this year, and we’re now seeing this increase in buyer demand start to filter through to actual sales, with monthly transactions being the strongest since 2022. This improving market momentum has also helped tempt many sellers back into the market who had previously put their plans to move on pause.

Property investors face higher Stamp Duty

With tax rises and spending cuts anticipated in Labour’s first Budget, the property market was expecting higher CGT and SDLT rates. However, Chancellor, Rachel Reeves CGT for residential assets unchanged from its current rates of 18% and 24%, which are already higher than any other asset class.

In a budget aimed at boosting the morale of the working class, first-home buyers remain shielded from higher stamp duty but those buying additional homes like buy-to-lets and holiday homes face a 2% surcharge from 3% to 5%, with effect from 31st October 2024.

Optimism amongst homebuyers for 2025

The recent base rate reduction in August reignited interest in the property market. In a recent in-house survey of over 1,200 homebuyers, 61% of respondents said they plan to buy in 2025, despite 59% being put off by last year’s peak in interest rates at 5.25%.

Drop in mortgage rates fuel demand

According to Zoopla’s latest House Price Index, mortgage rates have reached their lowest point in 15 months. The average mortgage rate for a new 5-year, 75% loan-to-value (LTV) mortgage now sits at 4.3%, a sharp decline from 5.5% a year ago. This drop has provided much-needed relief for buyers, with net sales increasing by over 10% nationwide.

Inflation falls to three-year low inviting more rate cuts

According to the Office for National Statistics (ONS), inflation dropped to 1.7% in September, marking its lowest level since April 2021. This drop is well below the Bank of England’s (BoE) target of 2% with Governor, Andrew Bailey recently suggesting that rate-setters could be “a bit more aggressive” in lowering borrowing costs if inflation continued to fall. Many investors now anticipate rate cuts at the BoE’s November and December meetings, which could further stimulate the housing market.

Malaysia goes big on South West London

Our team in Malaysia showcased some stunning properties in sought-after neighbourhoods like Twickenham, Hounslow Central, Wandsworth, and Clapham. The presentation featured a diverse range of apartments, mews houses, and townhouses priced from £364,500, with attractive rental yields of up to 6.2%.

UAE excitement in Hong Kong

In Hong Kong, our team of experts showcased brand-new luxury developments from top UAE developer Aldar in Dubai, Abu Dhabi and Ras Al Khaimah. The event also covered several financial strategies with clients looking to benefit from the Golden Visa scheme and other investment-friendly policies. The team is now all set to showcase the latest phase of Berkeley’s London Dock development in Wapping.

UAE fever reaches Indian shores

While our India office in Delhi showcased popular developments across the UAE in October, our Mumbai team is busy gearing up for a similar event bringing exclusive beachfront apartments to Indian investors. Our team of experts will also advise investors on the best strategies to maximise income in the UAE’s tax-free market.

Dubai investors get a preview of TwelveTrees Park

Our directors, Anita Mehra and Marc von Grundherr were in Dubai meeting clients 1-to-1 and speaking to investors about the benefits and potential of investing in Berkeley’s new Zone 2 masterplan development, TwelveTrees Park. Located next to West Ham station and its five connecting lines, this mixed-use project offers green space, commercial areas and quick access to London’s key hubs, such as Stratford (3 mins), Canary Wharf (7 mins) and the City of London (10 mins).

Berkeley’s St Edward collection presented in Singapore

Our Singapore office recently wrapped up a showcase of West End Gate and Oval Village, developed by Berkeley Group’s St. Edward. Starting at an attractive price-point of £590,000 in London’s premium Zone 1 and Zone 2 locations, both developments provide exceptional on-site amenities and quick transport links with rental yields of up to 5%.

South African investors get a glimpse of Dubai’s skyline

Our offices in South Africa have been busy showcasing different UAE developments to buyers with an exclusive focus on a luxury skyscraper over 100 floors in Dubai’s Business Bay. The fully furnished, luxurious apartments and penthouses offer breathtaking views of the Dubai skyline with world-class facilities starting from AED 1.27 million.

Rental markets retain their competitive edge

While average advertised rents outside London hit a 19th consecutive quarterly record of £1,344 per calendar month, up 5.2% from last year, the average rents in London hit a new high of £2,694, marking a 2.5% increase. Although rent growth has slowed across the UK, demand remains strong, with an average of 15 enquiries per rental property – down from 23 last year but still nearly double the 2019 level of 8.

Rents stay way ahead of inflation

Although the supply of housing stock grew by 13% year-on-year, it is still 27% short of its peak 2019 levels, keeping sustained pressure on availability. According to ONS data, private rents rose by 8.4% to £1,295, significantly outpacing the 1.7% inflation rate by more than four times. This year the highest rent inflation of 9.6% was recorded in the 12 months to August.

If you are looking to buy, sell, let or rent a property in London, please get in touch and one of our team will be happy to assist you.