2024 Property Market Predictions

2024 Property Market Predictions

So, for the last time (at least officially) and ahead of his retirement Michael looks at what 2024 might hold in store for the local property market. 

The American philosopher Eric Hoffer once said, “The only way to predict the future is to have power to shape the future.”  Now whilst we as solicitors and estate agents may have the ability to influence the outcomes our own clients experience when they entrust us with their sale, purchase or rental, so much that influences the property market happens not at the micro level but instead at a macro level and thus is beyond our control.  Based upon that sage and level headed assessment of the situation only a fool would therefore try to predict what 2024 might bring so here goes!!

I am prepared to predict that the doomsayers who you will see making lots of noise about an imminent collapse in the property market (they crawl out of the woodwork every December!) will as ever be talking utter nonsense. In fact I see the signs for 2024 as far more encouraging than was the case this time last year.    This time last year the Bank of England had already raised base rate four months in a row and did so for a further ten until base rate sat at 5.25% as it does today.  The difference is that inflation which was rampant this time last year and which is why rates were rising is now under control.  This week’s official figures put inflation at 3.9% which whilst still above the Government and Bank’s target of 2% is now on a steep downward trajectory.  We should be close to this target come December 2024.

I predict that we will see base rate cuts begin in the Spring of 2024 with an outside chance they could be cut even sooner.  I expect to see several rate cuts next year with base rate being somewhere around 4.25% by this time next year.  This will mean that mortgage rates will start to fall and that two and five year fixed rates which are already falling, will fall still further.  Prevailing interest rates tend to be the factor that exerts greatest influence on the property market so I am encouraged by what I am seeing in this regard.

The cost of living crisis which has exacted a toll on the market this year will be less of a negative drag next.  Wage inflation is now outpacing inflation as a whole with some of the pressures families were experiencing easing slightly although by no means disappearing altogether. One concern I do have is the SNP Government’s recent addition of a new 45% tax band at £75K to £125K (approx.) plus a further increase in the top rate of tax.  Scotland is already the highest taxed part of the UK and I believe these tax policies send out the wrong signals and given that independent research shows that anyone earning over £27,000 per annum is worse off in Scotland than in any other part of the UK this will only out further pressure on family budgets.

The other big event we know about for 2024 is that there will be a General Election with a Labour victory looking likely.  Most commentators think the election will take place in October although increasingly some predict May. The months leading up to an election historically have tended to be busy in the housing market with there then being a lull in the weeks immediately preceding the big day.  Given Labour’s move back towards the centre ground of politics and the signals regarding fiscal policy Sir Keir Starmer and Shadow Chancellor Rachel Reeves have given, the City seems sanguine about the likely Labour victory so I do not expect such an outcome to cause a wobble in the money nor property markets.

There are of course as the former American Secretary of Defence Donald Rumsfeld said the known unknowns and the unknown unknowns (!) which could through a spanner in the works.  No one saw Covid coming nor Russia’s invasion of Ukraine yet these two events have exerted the greatest influence on global events and economic performance in the last three years.  Barring such an unforeseen event however I am confident that 2024 will be a better year for the property market.  Prices may ease and soften a little further but the volume of sales will I think increase modestly and greater confidence return especially from Spring onwards.

And if I’m wrong, well I won’t be here to catch it in the neck!  ( I will of course still continue to be associated with the practice as a Consultant so will in fact be around to answer for any miscalls).

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