It’s no news that the property market has been turbulent over the past few years. Base rates and house prices have risen causing some investors to exit the market, while other buyers are waiting it out for the right moment to get their property investment journey started. This year, however, it seems more people are getting back into investing as data shows online searches for 'property flipping' are on the rise. Rightmove also states there is a “strong return in buyer confidence”. Let’s explore why 2024 is earmarked as the year of growth for investors:
1. Property prices are getting lower
After a general year-on-year decline in property prices, Rightmove states in Scotland property prices dropped by -1.2% in January 2024 compared to December 2023. Furthermore, Savills forecasts property prices will grow by 17.9% by 2028 which is ideal for both present buy-to-let owners and potential investors. Entering the market or expanding your portfolio in 2024 when prices are lower presents the opportunity for investors to benefit largely from price growth in the not so distant future.
2. Discounts are at a 5 year high
Not only are prices dropping - discounts on properties have also reached a 5-year high. According to Zoopla, sellers are typically cutting prices by 5.5%, or £18,000 off the original asking price listed. Many more people are also turning to auctions to find themselves a discounted property – in Scotland, the average auction guide price is £68,309. This is 62% below the average asking price of £178,595 on the open market, according to Rightmove.
3. Wide variety of finance options available
There is an increasing number of finance options available in 2024, allowing buyers to secure a short-term loan to complete investment purchases quickly. Mortgage experts at Revolution Finance Brokers say bridge lending has gone up almost 50% since the Bank of England started raising rates in late 2021.
Bridge finance is a type of short-term finance which is regularly used to complete on an auction property purchase quickly. The loan is secured against a property, and typically lasts for up to 12 months. This allows buyers to use auction finance to bridge the gap until they can secure a traditional mortgage, or gives them time to sell other assets to pay back the loan.
Auction finance can be used by investors for property purchases that high street mortgage lenders may not lend on.
4. Increased number of properties for sale
There was huge competition in the property market during the pandemic, causing a reduction in the amount of properties available for sale. With all the recent changes in the market, there is now a greater supply of properties with the amount listed being at a 6-year high.
This increase in supply goes for the auction market, too – there was a 10.5% increase in lots offered via auctions in Scotland in 2023, and this is set to continue. Increased supply and demand presents new investors with more choices to find the right investment for them and shows that there is confidence in the market from buyers.
5. Rental demand continues to grow
Research published by the National Residential Landlords Association (NRLA) found that 71% of landlords reported increased rental demand last year. This has almost tripled since 2019 when only 22% expressed that they’d seen growth in demand. This is another reason investors can feel more certain investing in property in 2024, as a sense of security is present in knowing that high returns are accessible due to the available demand for your investment.
It is also important to look at regional cities for buy-to-let investment – Glasgow's rental market is the strongest it's been in a decade, with fewer flats available for rent, leading to higher demand and prices, reports local letting agency Rosevale Letting.
The stability that has started to return to the property market near the end of 2023 is undoubtedly carrying over into 2024. Reducing property prices, declining mortgaging rates, growing rental demand and increase in properties on the market are all signs that 2024 is shaping up to be a good year to invest.
Auctions are known for presenting a unique advantage for investors looking to secure properties below market value. Here at Auction House Scotland, we regularly sell excellent buy-to-let opportunities and even tenanted portfolios with plenty of finance options available.
If you’d like to know more about buying at auction, give us a call on 0141 339 4466 or read our FAQs here.
