Building on the momentum of 2023, the North West is poised for continued growth in rental and property prices. Early investment in this thriving region enhances the likelihood of capital appreciation by the end of 2024. 

Notably, cities such as Liverpool, Manchester, and Preston are witnessing substantial investments, propelling property prices upward.

Liverpool, in particular, is undergoing a remarkable transformation through the £5.5 billion Liverpool Waters project, spearheaded by The Peel Group – the visionary force behind Manchester’s Media City and London’s Canary Wharf. This transformative project in the city centre encompasses new housing, entertainment venues, and business spaces. A notable feature is the Everton Bramley Moore Stadium, set to be completed in 2024, with the capacity to host a variety of events.

With these diverse developments, the demand for both short-term and long-term tenancies is anticipated to soar. Drawing inspiration from the success stories of Canary Wharf and Media City, Liverpool Waters is poised to become a thriving hotspot in the years to come.

In 2023, the North West boasted some of the highest yields and impressive rates of capital growth. Property prices in the North remain significantly more affordable than those in the South. Manchester, having undergone recent regeneration, promises secure and steady returns. Meanwhile, Liverpool stands out with high returns and substantial capital appreciation.

Whether you seek stability or high returns, the North West caters to diverse investment goals. Seizing the opportunity to invest early in this region ensures you’ll reap the rewards of the anticipated success in the 2024 property market.

Market Shifts – Anticipated Interest Rate Drop

The Bank of England’s recent decision to uphold the base rate emerges as a positive indicator for the property market in the upcoming year, setting the stage for a promising 2024.

As inflation experiences a gradual decrease, experts predict a prospective decline in interest rates. The anticipation is that these rates could potentially decrease to 4% by the end of the next year, with a further reduction to 3% anticipated by the end of 2025.

This potential decline in interest rates holds significant implications for the property market. The anticipated drop creates a more favourable environment for mortgages, rendering them increasingly attractive to a diverse spectrum of investors and prospective homebuyers alike. 

With lower interest rates, the cost of borrowing diminishes, thereby enhancing the overall affordability of property ownership. This will inevitably encourage existing investors to consider expanding their portfolios while also opening up the market to a broader audience, including those entering the property market for the first time.

AST vs. STL Dynamics

The surge in popularity of Short-Term Let (STL) properties throughout 2023 can be attributed to a strategic response to the prevailing high-interest mortgage rates. Investors, seeking avenues to navigate the financial landscape shaped by these rates, turned to the flexibility and potentially lucrative returns offered by STL arrangements. However, the unintended consequence of this surge was an over-saturation in certain property markets, leading to a re-evaluation of the regulatory landscape.

Recognising the need for balance and sustainable growth, key UK cities such as London, Manchester, Birmingham, and Edinburgh responded by implementing restrictions on STL properties. These regulatory measures aimed to address concerns related to housing availability, community dynamics, and the overall impact of excessive short-term rentals on the local property market.

As we anticipate a decline in interest rates, a consequential shift is expected in the investment landscape. This shift could mark a turning point in the profitability of Assured Shorthold Tenancy (AST) properties. 

With the potential reduction in interest rates, the attractiveness of AST properties is poised to increase. AST properties, characterised by longer-term leases and more stable tenancies, become a more appealing investment option in a lower-risk environment.

Investors, seeking a balance between returns and risk mitigation, are likely to find AST properties a compelling choice in this evolving market scenario. 

The anticipated increase in profits from AST properties aligns with the broader trend towards a more sustainable and stable property investment strategy. This shift not only offers investors a chance to recalibrate their portfolios for improved long-term gains but also contributes to the overall resilience and equilibrium of the property market as it adapts to changing economic conditions.

* Owen Czarnecki is Advantage Investment’s investment consultant *