We have now entered the final quarter of 2024 and the good property news keeps coming. Property has already proven its resilience this year and outperformed negative expectations.
Now, the latest data from Nationwide shows that property prices are growing at the fastest rate for two years.
House prices are up by an average of 3.2% year-on-year, with the new national average reaching £266,094. On a monthly basis, prices increased by 0.7% which is also a high for the year.
The pace of growth is increasing
Those results are good in isolation, but they are even better when compared to previous results. In August, annual growth was recorded at 2.4% and monthly growth was -0.2% on average.
That means that not only are prices growing by a significant amount, but the pace of growth is also increasing. Not since November 2022 has house price growth been this fast.
That is fantastic news for homeowners, investors and anyone looking at UK property for sale. Confidence is flooding the market and new listings are at a 7-year high as more people enter the market.
Commenting on the figures, Robert Gardner, Nationwide's Chief Economist, said: “UK house prices increased by 0.7% in September, after taking account of seasonal effects. This resulted in the annual rate of growth rising from 2.4% in August to 3.2% in September, the fastest pace since November 2022 (4.4%). Average prices are now around 2% below the all-time highs recorded in summer 2022.
Income growth has continued to outstrip house price growth in recent months while borrowing costs have edged lower amid expectations that the Bank of England will continue to lower interest rates in the coming quarters. These trends have helped to improve affordability for prospective buyers and underpinned a modest increase in activity and house prices.”
Is this the right time to invest in UK buy-to-let property?
UK buy-to-let investment is now not only a better prospect than stocks and shares, but it also has more potential than any point for at least two years.
As recently as Q1 2024, Lloyds Banking Group was predicting that house prices would fall between 2% and 4% by the end of 2024.
Even outlets which posted more positive predictions underestimated the scale of growth that was coming. For example, Knight Frank stated in January 2024 that they saw house prices increasing by a maximum of 3% this year – and even that prediction was considered an overly positive outlier.
Given that we are now seeing year-on-year growth of 3.2% with a full quarter still to go, it is fair to say that the market has outperformed even the sunniest expectations. We are now looking ahead and analysts like Savills have revised their forecasts, stating they expect to see 21.6% growth by the end of 2028. This is in spite of their initial prediction that house prices would fall 3% over the course of this year.
Where to invest in buy-to-let in Q4 2024?
With the market growing and a new property cycle underway powered by reduced borrowing costs, the question becomes: where should you invest to ensure the highest returns?
The data from Nationwide shows that all regions of the UK are seeing house price growth, with Northern England performing the best overall.
Robert Gardner said: “Across England overall, prices were up 1.9% compared with Q3 2023. Northern England (comprising North, North West, Yorkshire & The Humber, East Midlands and West Midlands), continued to outperform southern England, with prices up 3.1% year-on-year. The North West was the best performing English region, with prices up 5.0% year-on-year.”
The strong performance in the North West is based on the booming property markets in Manchester and Liverpool. These two cities have led the way nationally for many years and are predicted to continue doing so in the future.
For example, JLL has predicted that house prices in Manchester will go up 19.3% by the end of 2027. That’s almost equivalent to the national growth Savills predicted by the end of 2028.
Rents in the city are also increasing fast, 12.3% year-on-year in 2024 compared to the regional average of 9.2% and the national average of 8.5% according to the Office for National Statistics.
That makes property for sale in Manchester a valuable commodity. Developments like VIVERE are perfectly situated in a location with not enough properties for the thousands of renters looking for premium city centre accommodation.
Similarly, rents in Liverpool are recorded as increasing by anything up to 10-12% year-on-year, making Liverpool buy-to-let property like Centric a highly attractive opportunity for any investor.
House price growth is here to stay
There are many excellent investment opportunities available, but the most important thing to remember is that those who buy sooner will see the highest returns.
With both property prices and rents set to increase in the coming years, the new property cycle is a time of great opportunity. The most important long-term investment decisions will be made in the next 12-18 months.
Want to learn more about the market and our available UK property investment options? Get in touch with the team today to learn more.
