One of the first forecasts for the rental market for 2024 suggests that strong growth will continue.
Property consultancy JLL says that a lack of new rental stock and a challenging interest rate environment will lead to rental growth exceeding wage growth next year, with rental prices across the UK expected to increase by 5.0 per cent in 2024.
This comes after UK rents increased around 6.0 per cent on average this year, followed by Greater London on 7.0 per cent.
The consultancy also highlights the significant undersupply of homes in the UK. Since the introduction of housing targets in the mid-2000s, there has been a cumulative undersupply of approximately 1.5m homes.
JLL predicts that this undersupply will worsen further, with a cumulative shortfall of 720,000 homes between 2023 and 2028.
On the sales side, JLL’s outlook for prices in 2023 is that they will end this year on an average of 6.0 per cent below last January’s figure, with prices in London down 4.0 per cent.
Looking ahead to the period from 2024 to 2028, JLL predicts that prices will bottom out in 2024, with the expectation of single-digit annual falls in the year to December 2024. A return to growth is forecasted in 2025 as fixed rates decline and market outlook becomes more certain.
In terms of rental growth, JLL anticipates that the lack of new rental stock and a challenging interest rate environment will lead to rental growth exceeding wage growth. Rental prices across the UK are expected to increase by five per cent in 2024.
JLL’s residential research director Marcus Dixon says: "Despite the uncertainties faced by the UK property market, we have seen resilience and stability over the past year. Looking ahead, we forecast a bottoming out of prices in 2024, with single-digit annual falls likely.
“The UK housing market still faces challenges in terms of supply, with a cumulative shortfall of 720,000 homes expected between 2023 and 2028. Addressing these structural barriers is crucial for achieving meaningful increases in supply and mitigating affordability issues."