Navigating the 2024 Property Market on the South Coast

with Chris Wright, Associate Director of Valuation at MSP Capital. 

The UK residential property market is always a topic of great interest, especially for those engaged in property development and investment. As we look towards 2024, several key trends can be pieced together to provide an outlook for the sector.  

At MSP we have over 40 years of property finance experience, and are proud of the property experts that form Team MSP.  This includes Chris Wright, Associate Director of Valuation who first became a Chartered Surveyor in 2010 and has worked for a number of multi-disciplined property firms on the South Coast. We caught up with him to get his views on what we might expect from the UK residential property market in 2024. 

Interest rates 

Interest rates are a significant aspect that affects the property market. The good news is that the base interest rate is widely forecast to have peaked at 5.25%. With inflation falling faster than anticipated, the Bank of England could start cutting interest rates from June 2024, according to The Times.  

Mortgage rates 

Mortgage rates, a critical driver of the housing market, are expected to remain higher for longer into 2024. A reduction in mortgage rates to ‘more affordable levels’, is not anticipated until the second half of the year, which suggests that any improvement in housing affordability will be contingent upon increases in household incomes and wages. 

Chris offers a measured view. “Despite the anticipated high mortgage rates, the South Coast’s property market has historically shown a degree of insulation from such fluctuations. It’s a very desirable location, and while affordability may tighten, we expect sustained interest in property development and investment in the area.” 

House price changes  

There are mixed predictions regarding the direction of house prices. When asked about the general direction of house prices, “We’re seeing a complex environment,” Chris says. “It’s a reminder that the market is not immune to corrections, and as property professionals, we all must be prepared for that.” 

Looking at the broader picture over the next five years, some forecasters, such as Savills, predict an average house price growth of 17.9% across the UK by 2028.  

In the near term, some anticipate a price fall by 3% in 2024, which would represent a significant decline and bring house prices back to levels seen in the previous summer  . However, this price reduction is not necessarily evenly spread throughout the regions. Chris stresses that strategic foresight is needed to navigate this uneven terrain, where some regions may offer better opportunities for development and investment than others. 

Addressing the possibility of market corrections, Chris is cautiously optimistic. “While some predictions suggest a potential fall in prices, the South Coast’s market is less volatile due to its strong appeal and continuous influx of buyers drawn to the lifestyle and opportunities here,” Chris states, implying that the region may be more insulated from broader economic downturns. 

What does this mean for property development? 

For property developers and investors, these predictions suggest a need for cautious optimism and strategic planning. The potential for slight price increases could offer opportunities for profit, particularly in regions predicted to outperform the average. However, the overall uncertainty, with risks of price stagnation or decline, means that careful market analysis and risk assessment will be essential. Developers should prepare for a range of scenarios, considering the potential impact of mortgage rates and regional variations in market performance. 

Developers looking to capitalise on these trends should focus on understanding region-specific predictions in order to form their development strategies. They should also seek to mitigate risks associated with higher mortgage rates and potential price stagnation. It will be essential to monitor economic indicators closely, especially wage growth and mortgage rate changes, as these will significantly influence buyer affordability and the viability of development projects. 

Conclusion  

Chris’ analysis suggests that while the UK residential property market may experience varied trends in 2024, the South Coast holds a promising outlook for developers and investors. “Our approach at MSP Capital is grounded in our deep understanding of the South Coast’s property landscape. This local insight, coupled with our strategic planning, enables us to navigate the market effectively.”