Industry Insights

Posted by Brickflow on 4th March 2024 -

Are we out of the woods yet? Well, not really – recession, living costs and mortgage prices continue to hold back the property market. But relaxation of PDR rules has come just at the right time to capitalise on the soaring HMO and BTR sectors.

The Economy

Just as we relaxed a little over the state of the UK economy, turning our heating up a notch, and splurging on non-supermarket-basics items, a recession walks in.

The ONS confirmed a 0.3% decrease in GDP (gross domestic product) for the three months to December 2023 – meaning a technical recession, after a second quarter of decline (-0.1% in Q3 23). A significant fall in retail sales leading up to Christmas and a drop in all main economic sectors are behind the recession.

For some perspective, between Q1 of 2008 and Q2 of 2009, GDP shrank by 6%. 

The UK avoided recession in the first half of 2023, but succumbed to the combined effect of weak growth in European markets and low productivity. The fall in GDP will increase pressure to cut interest rates sooner.

In an ironic twist, rising real wages will likely be the recession-busting hero, despite being positioned against the BoE last year and supposedly responsible for keeping inflation high. In 2024 the surging real wages (expected to rise by 2.6% this year) has boosted the economy and may have already dragged Britain out of recession.

With an election looming the government is under pressure to demonstrate how it will deliver it’s promised economic growth. The 6th March budget is likely to be the last major fiscal event before the general election, and speculation around what chancellor Jeremy Hunt will deliver points to income tax and NI cuts, fuel duty cuts, abolishing inheritance tax, child benefit reform and help for first-time-buyers.

How is the property market looking so far in 2024?

According to Rightmove, market momentum is building, with average house prices up 0.9% in February compared to last month and an annual increase of 0.1%. This comes after consecutive annual decreases in every month since August 2023. The average asking price across the UK is now £362,839.

This increase has been driven by more sellers and buyers coming to market, with listings increasing by 7% and buyer enquiries up by the same. Zoopla is reporting a 12% increase in buyer demand and similar price increases, as do other key HPIs.

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