The UK’s property market is on the brink of a promising upturn following a temporary slowdown, according to a recent report from specialist lender Atelier. This development comes as welcome news to homeowners and investors alike, heralding a period of financial growth and market stability.

In the report titled ‘Past performance points to future potential’, Nicole Lux, a Senior Research Fellow at London’s Bayes Business School, shares an optimistic forecast for the housing market. The research suggests that the UK is nearing the lowest point of the current property market cycle, with an improvement expected in the near future. This anticipated upswing is supported by historical data and points towards a revitalizing of the market, stabilised interest rates, and a rising demand for homes.

Decoding Historical Trends

Lux’s analysis is grounded in an extensive review of data dating back to 1969 when the Office for National Statistics (ONS) first began tracking house price statistics. Her examination of long-term trends provides insights into the drivers of the property market such as property values, inflation, interest rates, and demographic changes. This in-depth historical perspective helps forecast a medium-term outlook for these critical factors.

Currently, the UK is experiencing a slowdown in house price growth, but this trend is expected to be short-lived. The latest data shows a decline in house prices by 3.96% between July and August 2023, marking the beginning of what appears to be the sixth major deceleration since records began.

A Look at the Recovery Phases

The study indicates that typically, periods of price decline last about 16 months. Each of these phases has historically been followed by a significant and prolonged recovery. In fact, since 1987, residential property values have increased at an average annual rate of 6.8%—more than double the inflation rate.

Strategic Insights for Developers

Chris Gardner, Chief Executive of Atelier, emphasised the importance of agility for developers facing the cyclical nature of the property market. With private enterprises accounting for 60% of new housing in the UK, their ability to quickly adapt to market changes is crucial. Gardner advises developers to maintain a flexible approach to handle short-term market fluctuations while focusing on a long-term strategic vision.

Gardner remains confident about the future of the property market, stating, “Property is a long-term asset class, and with the data now available to us, we are positive about the future.”