Three model houses with signs on which say: 'Buy me', 'For sale', 'Best deal'

Category: house prices

Leading property website Zoopla has calculated that UK properties are 8% overvalued, with property prices 1.5% higher. By the end of 2024, these figures are expected to decrease to a more accurate position.

Compared to previous economic downturns, like the 2007 Global Financial Crisis, which saw properties become dramatically overvalued at rates of over 50%, this 8% statistic is far less severe and moving towards a realistic price point.

Landlords looking to purchase will be able to do so with confidence in 2024, especially with the ability to negotiate in their hands.

1.1 million property sales are anticipated in 2024, with an impressive 75% of these either completed or agreed with a completion date in sight. The remaining 25% of property sales are not yet decided upon.

This estimated number of total property transactions is 10% higher than 2023, but Zoopla representatives have commented that the figures are below the 20-year average.

Expectation for buy to let mortgage rates

Residential mortgage rates are anticipated to remain within a 4.0-4.5% range. For landlords and property investors, average buy to let mortgage rates are staying steady at 5.55%.

At the moment, the general sentiment is that the trend of average incomes rising combined with longer mortgage terms will lead to properties becoming more “fair” and affordable, thereby improving sales volumes. Property prices may go down a little, but they will not fluctuate to any significant degree.

General Election impact

The widespread speculation about the 2024 General Election results has had no discernible impact on property transactions (beyond a typical summer slowdown).

Richard Donnell, executive director of Zoopla, has personally commented on the matter:

The housing market continues to adjust to higher borrowing costs through modest house price falls and rising incomes. Buyers using mortgages are also relying on longer mortgage terms to gain that extra few percentage points of buying power to afford a home.

“The general election campaign has had a limited impact on market activity, although the seasonal summer slowdown is arriving. Sales agreed continued to increase and more homes for sale means more buyers looking to move in the second half of the year. The timing of the first cut in the base rate is a key moment and will give a boost to both market sentiment and sales activity. Overall, we expect house prices to be 1.5% higher over 2024.

Areas most affected

Areas where properties are currently priced highest include Northern Ireland and the North West of England, with Sunderland seeing a 5.2% price increase.

In comparison, areas where properties are experiencing the most dramatic pricing falls include the South, East and South East of England, with Canterbury prices decreasing by -4.1%.

What does this really mean for landlords?

Instances of properties being overvalued may raise alarm bells, but it’s important to maintain some perspective on the relatively stable state of the housing market.

Overall, current rates of overvaluation should be of no real cause for concern. Landlords are in a stronger position to negotiate prices than a residential buyer, who approach a purchase from a more emotional position.