Jonathan Rolande: Five questions everyone is asking a...

What will happen to house prices? Should I rent or buy? Will a Labour or Tory Government be better for homeowners. And have we finally seen the back of interest rates?

These form just some of the questions those looking to predict what will happen in the property market next year are asking.

The year has ended positively for the market, and green shoots are on the horizon.

Trying to predict what will happen next is never easy but there are questions which come up again and again when I talk to people working in the sector.

Will prices drop or rise?

It is famously difficult to predict house prices in anything but the short term but I’ll have a go anyway. Over 2024 we can expect to see recovery in volumes and prices in popular locations where wealthy investors purchase or families buy a home to live in. The values here look likely to increase but the national average will be pulled down by less desirable property losing value.

Buy to Let is still in bad shape and will continue to be so for some time to come. This will suppress prices in larger blocks of flats and estate-type homes. We may end 2024 with almost no growth in prices but it could have been far worse – a free fall predicted by some, looks very unlikely at the moment.

Will rents rise further in 2024?

Inflation in the rental sector will slow as rents reach their peak affordability. The market will still be very competitive with too many tenants chasing too few properties. This problem is exacerbated as many already in a rented home are choosing not to move because the market is so difficult. Buy to Let mortgages eliminate almost all of the profit of Buy to Let so there will be fewer sales to small investors. More may choose to leave the sector ahead of a predicted Labour victory which will again reduce supply. 2024 will be a difficult year for tenants yet again.

Is a new Government good for the market?

The current Government will inevitably try to generate a feel-good factor which may temporarily boost the property market. the expected arrival of a Labour Government would usually strike fear in to the hearts of investors and property developers, many of whom would run to the nearest exit.

However, the property market has been in such a dreadful state for years now, a moderate Labour administration may be welcomed if measures are finally put in place to increase stock and equality in the sector. Any change will cause some jitters, but I see a change of Government as a positive thing for the market.

Have we seen the end of rate rises?

With the Bank being independent, rates should not be adjusted to assist in an election campaign. Based on the property market and inflation data alone, I do not think there is a case to reduce rates at least until the final half of 2024. That said, after years of gradual increases, a static rate for the year would be very welcome!

Is it best right now to buy or rent?

This is a question I get asked a lot. It’s complicated, not least because nobody can say for sure whether prices will fall or rise in the near future. To those asking the question, the Rightmove tagline is a good place to start – ‘there is never a perfect time to buy, just the right time’. In other words, don’t worry too much about the short-term ups and downs, it isn’t worth putting life on hold for that. Buying can be cost-effective now that renting is so difficult and expensive and you’ll feel more secure in your home. If that’s important to you, perhaps it is the right time to buy.

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