2024 Lettings Forecast

After much upheaval in 2023 which saw mortgage and interest rates rise in quick succession, and housing prices start to stall and even fall, everyone is wondering how the property lettings market will fare in 2024.

THE RENTAL MARKET IS REACHING SATURATION POINT

Demand for rental property in the Capital outstripped supply in 2023 for a number of reasons:

1. The post-pandemic return to work meant that the desire to live in London increased again, whilst the available rental property stock had reduced.
2. Employment opportunities have been buoyant in the capital attracting more people wanting to dwell in the capital.
3. International travel resumed and more foreign students entered the market putting pressure on the demand for temporary accommodation.
4. The increase in mortgage rates has meant that purchasing a property has become out of reach for many at present, forcing people to remain in rented accommodation.

All predictions seem to point to a continuation of a demand for rental stock, whilst the economy remains uncertain and the possibility of a recession lurks in the background.

LONDON RENTAL FEES HAVE PEAKED

Key property analysts suggest that London has passed peak rental growth. Rent in the capital has risen by an average 9% over the course of 2023. However, although rental property is still being snapped up quickly, the suggestion is that rental prices have now reached or gone beyond affordability.

“Londoners have to allocate 40.2 per cent of their income to rent now.”

Zoopla Rental Market Report

Moving forward, rental fees are therefore expected to settle down with just a small increase of 2% expected during 2024.

THE RENTAL MARKET WILL START TO COOL

Trends show that the rental market will very likely start to cool during 2024 for the precise reasons that prices/demand have peaked, and there are signs that rents are beginning to be reduced. Supply is matching demand and therefore the tide is starting to turn.

In many respects, this is par for the course as the post-pandemic growth spike could not continue indefinitely. Furthermore, the increase in the cost of living, mortgage rates and interest have pushed the capacity of tenants to the limit.

Now is the time for re-balancing, a cooling-off period while waiting for better economic stability before a new wave of change, growth and optimism. 2024 should be a year of consolidation and pragmatism and hopefully, we’ll be looking at a brighter forecast this time next year.

IN THE MEANTIME, IF YOU’D LIKE TO DISCUSS MAXIMISING YOUR PROPERTY PORTFOLIO POTENTIAL PLEASE CALL 020 3637 7968 OR EMAIL info@mihproperty.co.uk