Will House Prices Go Down in 2024?

Estimated reading time 8 minutes

The housing market has been a tricky one to navigate throughout 2023. Whilst it has never been easy for first-time buyers, 2023 saw more of them finding it harder than ever due to the rising cost of living. With inflation at unhealthy levels, and mortgage rates at their highest since 2008, the opportunity to buy a home has been reduced quite considerably.

For those already on the property ladder, things have been a little easier, but it has still not been an altogether straightforward process.

With the base rate having been frozen at 5.25% and inflation slowly easing up, there is hope that 2024 will see property affordability become more common throughout next year. That being said, we won’t be expecting the base rate set by the Bank of England to suddenly drop to the levels pre-covid. However, the further we progress into 2024, the more likely we could see affordability becoming more achievable for many.

Just recently (November 2023), the ONS announced that house prices fell annually for the first time in a decade during September. Could this be the start of things to come and potentially see you able to complete the fast house sale you have hoped for? We took a look at what 2024 might hold.

What have house prices been like in 2023?

Throughout 2023 the housing market reacted off the back of a rather unusual period. Covid changed things in many places and the housing market was one. During the pandemic, to stimulate the economy and keep things ticking over, stamp duty cuts and low interest rates all of a sudden drove the average house price right up. If we were to look back at December 2020 when Covid was still a mix of both the familiar and the unknown, the average house price in England was £269,150. This was 8.5% up on the prior year and 1.5% up month on month. Move on a year from that, when things were still a little murky, and the average house price in England had risen to £293,330, an almost 11% rise year on year. Reach December 2022 and prices had risen further, sitting at just over £315,000. Now, in 2023, we witness the first annual decline with a 0.5% reduction in house prices year on year. Other indexes show house prices have dropped even further in 2023 with Nationwide reporting a 2% drop and Halifax going even further reporting more than 3%.

Using the ONS data, we actually see that the house prices in the UK have been steadily rising since summer, but the rate of increase compared to 2022 has slowed dramatically and could now be reversing.

Month Price Vs 2022
Jan £289,819 +6.3%
Feb £287,506 +5.5%
Mar £285,009 +4.1%
Apr £286,489 +3.5%
May £285,861 +1.9%
Jun £287,546 +1.7%
Jul £289,824 +0.6%
Aug £291,000 +0.2%
Sept £291,000 -0.1%
*ONS stats are always released 2 months behind to account for land registry data to be processed.

But while prices could now be starting to come down, mortgages are still costing more than ever. At the start of 2022, a mortgage product that would have charged just 2% interest is now advertising rates of as much as 6% due to the high-interest rates we are currently enduring. This has meant property is still not as affordable for many as hoped.

Why have property prices fallen slowly in 2023?

It was expected by many that prices would fall by much bigger amounts much more quickly but this hasn’t been the case. There have been three key reasons as to why;

  1. The UK economy is slowly growing with incomes increasing and inflation starting to fall.
  2. Lenders have adapted their criteria and allowed refinancing through long-term mortgages, mortgage holidays for those struggling and interest-only mortgages. This has kept people in their homes and not enforced a sale.
  3. Lenders have been tougher on applicants than before. Not only have they had to prove they can afford the mortgage they have been offered but also prove they could afford one at a rate three times higher.

So, what will happen in 2024?

What will happen to house prices in 2024?

It has been estimated by Zoopla that house prices in the UK could fall by 2% in 2024 whereas the OBR says there could be falls of as much as 10%. Such disparity makes for a cloudy forecast.

Property price experts Zoopla say that the cost of living and, as a result, the budgets available to people, have stalled property prices and made them start to come down rather than rise. This may make it sound more appealing and by virtue, more affordable, but it doesn’t seem to be the case….yet. 

RICS, (Royal Institute of Chartered Surveyors) state that the mortgage rates and the cost of living have placated the demand so much that any progress is not likely in the short term.

Their in-depth report pulls together data relating to the number of listings, enquiries, sales, and more to produce a detailed look at what is happening. In effect, showing you the real, raw property data. In their October report, the most recent available, they highlight that whilst the market doesn’t look hugely positive, it is slightly more encouraging than what was reported last time out. For example, “The new buyer enquiries series posted a net balance of -28% during October.” This makes 18 consecutive months of this figure being in negative territory. Looking back at the figures prior to this and whilst the reading still isn’t great, the October data provides us with the least negative return since May.

Sales have slowed too but are showing signs of improvement. A net balance of -25% doesn’t sound great but compared to the -35% in September, things are a little more encouraging.

The same report states that the decline in house prices has slowed too but that at both the three and twelve-month point since the report was issued, we should see further falls of more significance. These could be signs of a trend that will lead us through 2024 where eventually, affordability and demand eventually meet. So where exactly does that leave people looking to buy, and those hoping to sell?

House prices in the UK 2024

Zoopla says that if house prices continue to fall and incomes increase, or the mortgage rates drop to more realistic levels, affordability will naturally improve and, as a result, encourage more sales. At the time of writing, the number of properties for sale is at a 5-year high but owners must be savvy with pricing if they are serious about securing a sale. You can list your house for sale but if you don’t price it appropriately, it’s going to sit on the market for a long time. The report from RICS says that demand remains negative, so it is important people time their listings right.

Perhaps indicative of where prices are going are the number of markets reporting price falls. Six months ago, approximately 1 in 20 housing markets were reporting price drops whereas now, that figure has hit 4 in 5. The falls have been small though, and there are no markets reporting falls in prices exceeding 5%. However, the team at Zoopla predict that throughout 2024 there will be an increase in markets reporting prices falling by this amount or more.

Even with falls of such an amount, the question about affordability will still be rearing its head at every opportunity. And it is the buyers’ financial might that is going to dictate what happens next. Mortgage rates of 4-5 and even 6% or more are stopping people in their tracks. Once affordability improves, the market will change.

How affordable will houses be in 2024?

Prices have fallen slightly as we were indicating earlier but they haven’t fallen in line with what was expected. If household incomes can start to rise in 2024 with mortgage rates coming down too, the movement on the market will increase. Inflation, mortgage rates and wages are all slowing the market down, but projections from the Bank of England say that by 2025, inflation will reach the 2% target set by the government. Inflation is slowly heading downwards at the moment, giving the potential for a rise in incomes, with that rise in income, property affordability becomes a little more obtainable.

We recently saw in a report from Zoopla that if mortgage rates were to remain around the 4-5% levels, that house price growth will remain in single digits for the next few years and be below the levels of growth of household incomes. This would then mean property becomes more affordable.

Mortgage costs, inflation, and low wages have seen it become a struggle to sell a home for many people. It has always been a case of waiting for the right time. With Gaffsy, it is always the right time as we guarantee your sale. Operating as cash house buyers, we value your property, make you an offer, and should you accept, can have the whole process complete in just seven days. This route to sale ensures you sell your home in a timescale that suits you and is built entirely around your needs. We buy any home too. So, whether your home has been on the market for months without a viewing, has seen better days, or is in perfect condition, we want to buy it. Start the process today with a quick call to our property purchasing experts.

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