UK Property Market Review 2024

December 5, 2024

2024 was the year that the UK property market emerged from the economic challenges of the last two years and proved its resilience once and for all.

Ahead of 2025, we have examined key market trends throughout the year and analysed what they mean for property investors in 2025.

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Market foundations – supply, demand and housebuilding

The foundation of the UK property market’s resilience is the imbalance between supply and demand. No matter what happens with the wider economic context, the simple fact is that there aren’t enough homes to go around.

That didn’t change in 2024 – and in fact, the supply problem only got worse.

It is estimated that:

At least 4 million homes are missing from the UK housing market
The government is targeting 1.5 million new homes over the next five years
In reality, we build approximately 200,000 new homes a year
There is a skills and materials shortage
The demand for housing keeps increasing

With all the above in mind, it is unlikely that we will ever be able to build enough homes to meet demand in the UK.

Even with changes to planning laws announced by the new government, construction industry analysts almost all believe that the rate of housebuilding will not increase sufficiently to meet demand.

That means competition for homes will keep going up, and both house prices and rents will grow.

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Rising market activity, growing rents and house prices

The lack of available homes is the number one reason why house prices and rents are forecast by Savills to grow fast in the next five years:

23.4% house price rise by the end of 2029
17.6% rental growth by the end of 2029

In the UK’s best market – the North West – growth is projected to be even higher than that.

In 2024, the housing market returned to growth following global economic uncertainty and political instability in the UK.

Following two years of flat growth – and even small falls in house prices in some areas – property values are now rising at their fastest rate for two years, and Q4 2024 also saw market activity increase further as economic conditions which had temporarily held back growth eased.

Rents have also continued growing throughout the economic problems thanks to the lack of available supply. In fact, they went up faster than wages across the UK – a great demonstration of the value of investing in UK property even when the market is not performing to its maximum potential.

When it comes to rents, 2024 was the year which proved they are likely to always keep growing no matter what else is happening.

Looking forward, Savills estimates that we need at least another 1 million rental homes by 2031 to meet demand. Given that the government’s ambitious target is to only build 1.5 million new homes in total by the end of the decade, that seems unlikely to be possible.

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The Bank of England, interest rates and mortgage affordability

2024 was the year when the Bank of England felt able to lower the base rate of interest once more – with major repercussions for the world of property.

Unusually high inflation, the global energy crisis and domestic political instability meant that the Bank had kept the base rate at 5.25% for seven consecutive periods.

That pushed mortgage rates up and reduced the affordability of borrowing for both owner-occupiers and buy-to-let investors.

However, this year the overall economic picture improved and the Bank finally started reducing the base rate – first to 5% in August and then to 4.75% in November.

The cuts gave the property market an immediate boost as lenders were finally able to reduce their mortgage rates. That meant people could buy again and many immediately entered the market.

Property listings reached a seven-year high and the second half of 2024 became one of the most important growth periods in the recent history of the UK’s property market.

In 2025, we are anticipating further cuts to the base rate of interest as the domestic and global economic situation continues to improve.

That will mean borrowing costs keep getting cheaper over the next year and more people will be entering the market for a new home. That increased competition will keep the momentum going and make UK buy-to-let property for sale a great investment.

Whether you are a domestic investor, an overseas buyer or are investing through a limited company, the next six months are the ideal time to buy UK property.

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New government, new Budget

The final big event for the UK property market in 2024 was the arrival of a new government. The election gave the Labour party a big majority and that provided instant stability to the markets.

A new Budget followed in October which was largely positive for property investors. Benefits included:

Bank of England projections confirming inflation rates should remain low
No increase in Capital Gains Tax on the sale of residential property
Inheritance Tax thresholds were frozen
No rent caps announced

The only cost that went up was Stamp Duty Land Tax, and that was only by a small amount compared to the projected house price growth that is incoming.

Indeed, the fact the government raised Stamp Duty can be taken as confirmation that they are confident house prices are going to keep increasing. If they weren’t, the tax would not have gone up.

Learn more about the new Stamp Duty changes here, and always make sure to speak to an independent tax advisor who will be able to advise you based on your unique personal circumstances.

Alternatively, if you want to avoid paying Stamp Duty altogether, you can invest in Purpose-Built Student Accommodation (PBSA).

Student property is exempt from this charge and comes with a range of other advantages, including:

Guaranteed pool of tenants
High demand for a low number of available beds
Hassle-free investment
Not subject to market fluctuations

It’s another good option for investors and is likely to continue being a popular choice in 2025 when Stamp Duty increases.

Learn more about our available UK property opportunities by getting in touch with our team today.

UK Property Market Review 2024

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