We posed some questions to Richard Adamson – partner and residential auctioneer at Allsop Residential, a leading property consultancy and one of the UK’s largest property auction houses.
Remember to check our interview with George Walker from Allsop Commercial.
It’s still early days to predict with certainty any trends that the sector will follow in 2024. While the residential market faced challenges last year, we observed a gradual resurgence in buyer confidence and optimism during the final quarter of 2023 due to the stabilisation of interest rates, inflation and borrowing costs. Given the significant influence of sentiment on the residential sector, this has sparked a notable return of activity in the market.
There will be opportunities across the residential property market in 2024, yet we anticipate the year unfolding in two distinct halves.
The first six months is expected to benefit from anticipated reductions in interest rates, resulting in a positive and stable impact on the property market. However, the forthcoming elections in both the UK and US may temporarily prompt a slowdown in market activity as stakeholders adopt a wait-and-see approach, introducing elements of uncertainty.
As we enter the year amidst a backdrop of increased optimism, it is crucial to be mindful of ongoing market challenges. While we may feel more positive, it’s important to tread carefully as there are still risks as we wait for macroeconomic changes to take hold.
There will always be demand for high quality products in excellent locations. Across the country, rental growth is still making buy-to-let a very attractive and plausible asset class. That’s especially true of HMOs, multi-let buildings, and small buy-to-let investments in particularly attractive towns.
There is a widening gap in yields between regional properties and those in the more prime locations in London and the south east, where we’re also still seeing capital growth. There’s some excellent value in London, which will recover strong, with international buyers in particular attracted to the market while interest and exchange rates make the UK a relatively attractive proposition.
Decreased interest rates and inflation will herald positive results for the sector. With lower interest rates reducing borrowing costs, this increases both buyer sentiment and investment in real estate. This, in turn, stimulates demand for properties, leading to increased activity. As a result, we expect income-producing assets and value-add opportunities to prove most popular.
We are hopeful that regardless of the governing party, there will be a renewed commitment to prioritising planning and development. The current state of the planning system underscores the pressing need for a more efficient and accessible framework.
Foreign investors have a small presence in the residential auction sector. However, as market stability increases, there is a strong likelihood of a surge in their participation, with London emerging as a particularly appealing destination.
Despite the market challenges in 2023, we experienced one of our most successful years, generating a total of £880m in sales across both commercial and residential auctions. This remarkable achievement underscores the robustness of the buyer market. As we transition into a more stable environment, there are plenty of reasons to be positive about the year ahead.