Promising Forecast For 2024 Property Market

Property values did not fall by as much as most people expected last year, giving many market watchers the license to be more bullish about prospects for 2024, reports Abode2.

Knight Frank and Oxford Economics have flagged a more positive outlook for global property markets, suggesting that “cautious optimism is emerging as prime buyers consider economic headwinds to be easing” and price declines are “running out of steam” in most major markets. In the UK, Rightmove has talked of only “modest” declines for average UK house prices in 2024, following a “better than expected” 2023. Zoopla, JLL and Lloyds Bank are all in the same ballpark, thinking that prices will dip another 2-3% this year (Zoopla at 2%; Lloyds at 2.4%; JLL at -3%) before things turn up. CBRE had pencilled in a similar number, but revised its forecast upwards last month, and currently expects UK mainstream prices to dip by less than 1% this year.

They are more outlying views. The OBR is more pessimistic than most – anticipating a 4.7% drop in average property values through 2024 – but even here the analysts think prices will bottom out within 12 or so months, with only a marginal 0.5% further fall in 2025 before positive growth resumes. Butting heads with a bearish OBR, Pantheon Economics drummed up plenty of media coverage with its bullish prediction of a 5% increase for the average UK house price in the coming 12 months.

Broadly speaking and with a major caveat, most forecasters are anticipating a pretty quiet year for UK property markets. Trends that characterised the previous 12 months are likely to continue through 2024, with things settling down after a nauseatingly turbulent few years.

The caveat is that we’re due a General Election. Prime Minister Rishi Sunak has told the world he “assumes” the vote will take place in the Autumn (probably October), but an earlier date (May) is not completely off the table – or we could feasibly have to wait until January 2025.

Usually, the market would view a General Election as a big point of uncertainty, preceded by a pause in home-buying activity and much hand-wringing at the prospect of e.g. a mansion tax. This time, however, luxury property professionals appear quite sanguine about the prospect of a Labour government (which polls suggest is the likely outcome), so long as it’s led by Keir Starmer.

In Prime Central London, Savills seems confident that prices will bottom out this year, before resuming positive growth in 2025. The firm’s latest five-year forecast (to 2028) comes in at +18.7% in PCL – very much in line with anticipated price growth across prime regions outside of the capital (18.7%).

Knight Frank is on the same page about the next 12 months, but more cautious about future growth. Research chief Tom Bill believes prices “are unlikely to move very much in either direction” in Prime Central or Prime Outer London through 2024. KF’s five-year forecasts, issued in October, peg PCL growth at +8.1% and POL at +6.5% by 2028 – with country houses and the UK mainstream market dawdling some way behind (+0.5% and +1.4% to 2028 respectively). Cautious optimism is emerging as prime buyers consider economic headwinds to be easing” and price declines are “running out of steam” in most major markets. In the UK, Rightmove has talked of only “modest” declines for average UK house prices in 2024, following a “better than expected” 2023. Zoopla, JLL and Lloyds Bank are all in the same ballpark, thinking that prices will dip another 2-3% this year (Zoopla at 2%; Lloyds at 2.4%; JLL at -3%) before things turn up. CBRE had pencilled in a similar number, but revised its forecast upwards last month, and currently expects UK mainstream prices to dip by less than 1% this year.