Outlook 2024: Key forecasts for 2024

Average house prices across the UK are projected to decline by approximately 4.4% in 2024, following growth of around 1% in 2023 and robust growth of over 8% in each of the preceding two years. This implies that even with some price reductions, by the end of 2024, house prices will still be approximately 21% higher than they were pre-pandemic.

Regionally, London prices are anticipated to experience the steepest decline by the end of 2024 at -6.2%, with all other southern locations facing price deteriorations greater than those in the northern regions (excluding Northern Ireland). Nonetheless, demand is expected to rebound strongly, largely in line with anticipated interest rate reductions, resulting in house price gains of around 1.3% in 2025 and nearly 5% the following year.

Rental growth in the commercial property sector will again be spearheaded by the industrial sector, as continued strong competition amongst occupiers for both existing and new build product helps to maintain upward pressure on rental values despite the subdued economic outlook. We forecast average industrial rental value growth of 3.7% in 2024, well above the all-property average of 1.6%, although a deceleration from an expected 6.6% in 2023.

The retail and office sectors are also forecast to see modest positive average rental growth, at 0.3% and 1.0% respectively. For office property, occupier demand will be focussed on top quality, well-located city-centre space, of which there is little available supply. The current dearth of new development will mean continued upward pressure on prime rents, and the gap with rents for poorer quality stock is likely to widen further.

For agricultural land, we expect only a modest slowdown in the rate of growth in 2024 compared with 2023. Pasture land values will benefit from natural capital gains, while arable supply may shrink as farmers assess profitability and take land out of production, exerting upward pressure on values.

Source: Experian, HM Treasury Consensus, Real Estate Forecasting Limited, Carter Jonas

Our forecasts project the following indices: Residential – HM Land Registry House Price Index; Commercial – the MSCI Annual index; Rural – the Carter Jonas Residential Land Value Index