Page 6 - SA Chamber UK Newsletter April 2024

UK real estate – a shifting landscape

Rising interest rates (in the battle against inflation) have been squeezing homeowner
budgets in the UK and around the world, particularly for those with mortgages or fixed-
rate deals coming to an end.

This pinch is being felt in the UK rental market, too, with landlords exiting – possibly due
to the changing interest rate environment. Longer-term investors who bought around the
millennium are also cashing out, further shrinking the pool of rental properties.

Homebuilding is also facing headwinds. Material and labour costs are on the rise, and some
parts of London have stricter planning regulations. The pandemic shuffle isn’t helping either,

with some homeowners who fled to the countryside clinging to their London properties,
thus tightening supply even more.

The prime regional market, meanwhile, has seen some impressive gains, but growth is

slowing. This might be prompting some owners to consider selling and locking in those
profits – with post-pandemic preferences for different locations, changing family needs,
and tax considerations all potentially playing a role in their decisions.

And there’s no denying the UK housing market faces hurdles at the moment, including:
affordability concerns, shifting investor behaviour, limited new builds, and a shrinking pool
of existing properties.

The good news is that the UK’s fundamentals remain rock-solid. Top-notch education,
healthcare, legal systems, and a booming science and technology scene continue to attract
international buyers. Add in a housing shortage that’s likely to stick around in the short to

medium term, and it all suggests the potential for continued demand and resilient market
performance.

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SA CHAMBER UK NEWSLETTER APRIL 2024