The UK property market has experienced significant fluctuations in recent years, prompting investors to consider whether to buy property, particularly off-plan properties, in 2024. This market overview of off-plan investments highlights the current market conditions and underscores why this investment strategy remains attractive despite past volatility.
Benefits Of Off-Plan Investment
Before we explore the current market conditions, it’s worth noting that off-plan property investment presents several compelling benefits, making it an appealing choice for investors.
- Below-Market Prices: Allows investors to purchase properties at lower prices.
- Desirable Designs: New-build designs increase rental demand.
- Choice of Units: Investors can choose the best units in a development.
Related Article: Off-Plan Investing: 5 Benefits Under The Current Economy
Current Market Conditions For Off-Plan Investments
The UK property market in 2024 shows signs of cautious optimism despite the challenges of the past few years. Here’s an updated overview of the current market conditions of off-plan investments:
Positive Trends Of Off-Plan Investing
Price Growth: The Office for National Statistics (ONS) reported a 2.2% annual rise in house prices as of May 2024, the highest since March 2023. Savills predicts a modest house price increase of 2.5% by the end of the year, reflecting a shift from previous expectations of declines
Mortgage Rates: While mortgage rates remain elevated, they have fallen from their recent peaks. The Bank of England’s base rate cut to 5% has made mortgage rates more appealing, and the competitive mortgage market has resulted in more affordable options (Bank of England). For instance, Nationwide now offers a two-year fixed-rate mortgage at 4.84% and a five-year fixed at 4.50%.
Sales Expectations: The Royal Institution of Chartered Surveyors (RICS) reports improving market sentiment, with a positive net balance of respondents expecting residential sales volumes to recover over the next three months. This optimism is echoed by CBRE, which forecasts a 3% rise in house prices this year.
Reasons To Invest In Off-Plan Now
With the UK property market expected to change significantly in 2024, exploring off-plan investments is becoming more attractive. The current market conditions for off-plan investments present a unique opportunity, combining sustained capital growth prospects with favourable rental yields and limited housing supply. As key regions like the North West show promising signs of growth, investors are well-positioned to benefit from the evolving trends in this sector.
1. Sustained Capital Growth Prospects
The UK property market is expected to continue its growth trajectory in 2024 and beyond.
Forecasts indicate a 6% rise in house prices over the next year, driven by ongoing demand despite economic pressures.
Regions like the North West, including Manchester and Liverpool, are anticipated to see substantial growth due to increasing investments and economic activity.
2. Increasing Rental Yields
The rental market remains robust, with rental prices continuing to rise.
Although the rate of increase is expected to moderate, average rents are projected to grow by 5% in 2024.
This steady growth is supported by strong demand for rental properties, particularly in urban centres and areas popular with students and young professionals.
3. Limited Housing Supply
The recent victory of the Labour Party in the general election introduces a significant shift in housing policy. One of their major commitments is to build 1.5 million new homes over the next five years. This ambitious plan aims to address the housing shortage, which has been a persistent issue in the UK.
By significantly increasing the housing supply, the Labour government intends to make housing more affordable and accessible, potentially easing the pressure on property prices.
However, during the initial phase of this development, the supply-demand imbalance may persist, continuing to make existing properties and off-plan investments highly valuable.
4. Economic and Market Resilience
The UK property market has demonstrated resilience through various economic challenges, including Brexit and the COVID-19 pandemic.
Despite fluctuations, property prices have recovered and continued to grow. This resilience makes property investment a smarter strategy compared to more volatile markets.
5. Attractive Mortgage Options
The recent decision by the Bank of England to cut the interest rate to 5% marks a significant turning point for the UK property market. This move is expected to positively impact mortgage rates, making them more attractive to prospective investors.
Industry experts predict that while mortgage rates may not plummet immediately, this rate cut sets the stage for further reductions in the future.
As lenders gain confidence, more competitive mortgage offerings are likely to emerge, making property investments more affordable and accessible
Buy-to-let mortgages remain a viable option for many investors. The ability to leverage part of the rental income to meet mortgage payments can make property investment more accessible, especially for those unable to purchase properties outright. This financing flexibility continues to support the property investment market.
Related article: A Buy-To-Let Mortgage Guide For Property Investors
Conclusion
Investing in the UK property market in 2024 seems like a promising opportunity due to sustained capital growth prospects, increasing rental yields, limited housing supply, market resilience, and attractive mortgage options. Specifically, the current market conditions make off-plan property investment particularly appealing in high-demand regions like the North West.
At Advantage Investment, we aim to provide a hassle-free investment journey for our clients. Our business partners can assist investors in setting up a limited company for buy-to-let properties. If you’re considering this strategy, please speak to Advantage Investment’s property experts today at +44 (0)151 433 9300 or via email at contact@advantageinvestment.co.uk for professional advice.
