Some thoughts by Kobbii Nyarko of Portsmouth Property Connect

Following the property inflation year of 2022, the consistent bank rate rises that continued into 2023 affected property prices and sales volumes throughout the country. In Portsmouth specifically, the property market value dropped by 4.1% in the year leading up to November 2023, and sales volume plunged by almost 50%. Meanwhile the consecutive bank rate rises towards the 5.25% peak in August 2023 contributed to an overall average 4.25% drop in inflation.

In December 2023, the Monetary Policy Report projections anticipated that bank rates would remain around 5.25% until 2024 Q3. The more recent risks to inflation, include the US and UK coalition to fight Houthis in the Red Sea, and other prominent conflicts and disturbed economies across the world today.

This year, the two key factors that homeowners, landlords, property developers, and any other professionals should monitor are

1. 1. 1. Owner Occupier Costs (OOH) – the costs associated with purchasing, maintaining, and living in one’s home, which currently accounts for 16% of the most Comprehensive Measure of Inflation (CPIH). This is largely constituted by ~100% increases in mortgage payments since 2022, which has affected the majority of homeowners across the UK.
      2. Services Inflation – the UK economy is predominantly service based, meaning most jobs in the country revolve around providing a service. Since Brexit, the labour market has loosened significantly, and services inflation in Q4 2023 remained at an average of 6% – the highest result in over 10 years. To add more fuel to the fire, the country is currently in ‘the longest run of declining job vacancies in history,’ according to Office of National Statistics. As a result, some homeowners and landlords are struggling to make mortgage payments and maintain/renovate properties, which has a knock-on effect for those property professionals and businesses that support them.

    

It is hard for anyone to predict the UK economy in 2024, but we can identify and keep abreast of trends and share thoughts and concerns with colleagues and associates.  Real estate is the strongest asset that can be relied on during tough times, and a solid, informed strategy can help you navigate through the year and beyond.

Portsmouth Property Connect is a group of like-minded property professionals who meet on the 4th Tuesday of every month to discuss the local property market, gain a realistic perception of the climate and build relationships. Join us to stay up to date with this information and make informed decisions along your journey.