Rising rates have made remortgaging costly and rental reforms on the horizon have made the rental property market less attractive to investors, though plans to tighten minimum energy efficiency standards were kicked into the long grass.
House prices, underpinned by an ongoing demand-supply shortage, have not suffered as badly as anticipated, however.
Moving into next year, even if we are past peak pain in the housing market, that does not mean we are quite out of the woods yet, writes Savills head of residential research Lucian Cook on FT Adviser.
He predicts a return to sustained price growth in 2025, rather than this year – partly due to buyer caution before a general election.
“Instead, we expect 2024 to be a year of two halves,” he writes. “Modest price falls of around 3 per cent in the first half of the year, and little if any movement in pricing in the second half of the year, with transactions broadly on par with this year and similarly weighted to equity-rich buyers.
“This means that prime markets (broadly the top 5 per cent to 10 per cent of a given market by value) synonymous with cash and equity-rich buyers will recover more quickly than their mainstream counterparts.
“Thereafter progressive cuts in the base rate should gradually bring more buyers into the wider market and increase their purchasing power, giving capacity for price growth of around 18 per cent over the next five years.”
In the rental market, Cook predicts rental growth will rise by a further 6 per cent in 2024, before affordability pressures mean it will return to lower levels of growth between 2025 and 2028.
Major regulations
There will be a host of tax changes, new rules and regulations affecting advisers in 2024.
Among them, as announced by chancellor Jeremy Hunt in his latest Autumn Statement, Class 1 employee national insurance contributions will decrease from 12 per cent to 10 per cent in January, while Class 2 NI contributions will be abolished for the self-employed, and Class 4 NI contributions are set to fall from 9 per cent to 8 per cent in April.
Also in April, the pensions lifetime allowance will be abolished, while the tax-free allowance for capital gains tax will be cut from £6,000 to £3,000 and the tax-free allowance for dividends from £1,000 to £500.
Meanwhile, the state pension will increase by 8.5 per cent in line with the triple lock.
The Financial Conduct Authority’s recently launched capital adequacy consultation for advisers, one of the bigger regulatory pieces in 2024, will close in March and new rules could be out as soon as the second half of the year.
