Positive economic trends in the UK boosting investor sentiment

The UK’s highly desirable housing market is experiencing a surge in activity, driven by growing buyer confidence in the economy due to a decline in inflationary pressures. This rise in buyer activity stems from pent-up demand, as homebuyers are now moving forward with plans, they had previously postponed due to last year’s economic uncertainties.

Boost in buyer confidence

The UK inflation rate has dropped to 2.3%, its lowest in nearly three years, as the economy emerges from a brief, shallow recession.

With a strengthening job market and potential interest rate cuts expected by summer, pressure on household incomes is easing, improving affordability. However, the housing market remains sensitive to price changes.

Quickest economic growth since Q4 2021

The UK economy saw its most rapid growth in nearly three years during the first quarter of 2024, according to the Office for National Statistics (ONS). The Gross Domestic Product (GDP) rose by 0.6% in the three months leading up to March, marking the biggest growth since the fourth quarter of 2021.

Increase in stocks and sales

Given this positive economic outlook, we at Benham & Reeves have noticed an increase in sellers listing their homes, offering more choices for buyers and boosting market activity. This trend is expected to accelerate once the Bank of England reduces interest rates.

While the housing market remains challenging, our current situation is significantly better than a year ago, and we anticipate more stability in the coming months. According to Rightmove, the average price of UK properties for sale has reached a record £375,131, with the number of sales agreed in the first four months of 2024 rising by 17% compared to last year. Zoopla also reported a 20% increase in properties for sale compared to spring 2023 and a 9% year-on-year rise in agreed sales.

As we await the outcome of the General Election on 4th July, many analysts believe it will have minimal impact on the housing market, with interest rates and broader economic factors playing a more significant role.

Continuity in rental demand

Demand for rental properties in London remains robust, despite a slight decline in inquiries compared to last year. According to Rightmove, the number of people searching for rental homes in London is 17% lower than last year but still 54% higher than in 2019. They estimate that around 50,000 rental properties are needed to restore availability to pre-pandemic levels. Zoopla reports that the average rent in London has risen to £2,121 per month, marking a 4.2% increase over the past year.

Fast-tracked tenancy for presentable properties

At Benham & Reeves, we receive around 15 inquiries per rental property. Well-presented and competitively priced properties generally rent out within one to two weeks, resulting in minimal vacancy periods.

All new developments see strong rental demand, but Grand Union in Alperton, The Green Quarter in Southall, White City Living in W12, 250 City Road in EC1, Fulham Reach in Hammersmith and One Thames City in Nine Elms stand out in terms of popularity. Also, Riverscape and The Brentford Project by Ballymore are exciting new developments with great potential for rental demand.

For our investor community in Hong Kong, we have many brand-new properties by leading UK developers across several exciting new-build developments for sale in London. If you need more details about buying a property in the UK capital, reach out to us today.