Wondering what the housing market might look like in 2024? It’s not easy to predict what will happen in property, with so many variables and external factors influencing prices as well as supply and demand, but we have combed the data to bring you our UK housing market predictions for the year ahead.
What happened to the housing market in 2023?
Before we look ahead, let’s recap on 2023, a year of significant change in the housing market following the pandemic. Climbing interest rates and a cost-of-living crisis have contributed to house prices falling in relatively small increments over the course of the year, according to the Nationwide House Price Index.
According to Nationwide, the average cost of a home in the UK in October 2023 was £259,423, which represents a 3.3% fall compared to a year previously, though a 0.9% rise from September.
The UK House Price Index, which uses Land Registry data and is therefore more accurate, but also lags behind other sources, showed that prices actually rose by a modest 0.2% in the year to August 2023. On the other hand, Nationwide’s assessment, based on mortgage approvals, is that prices fell by 5.3% in the year to August.
It’s clear that the steep upward trajectory in prices we’ve grown used to over the past few years has been curbed, but we have not seen a crash in the housing market that many predicted for 2023.
Predictions for the 2024 property market
House prices will most likely continue to fall in 2024. This is linked to interest rates and mortgage costs, which are set to remain high over the next 12 months, making it harder to afford a mortgage and therefore limiting many buyers’ spending power.
If wage rises continue, however, this may go some way to boosting buyers’ pockets, and helping curb price falls. This contributes to predictions that price falls will likely stay relatively modest and in single digits, defying the cries earlier in 2023 for a collapse in house prices of over 10% or more.
Most property experts agree that property prices will remain flat or fall by moderate amounts in 2024, before starting to rise again from 2025. This is also when the Bank of England expects to reach its inflation target of 2%, meaning slower rises in the cost of everyday goods and services, more money in people’s pockets and the potential for lower interest and mortgage rates.
It’s important to remember that demand for housing in the UK remains high, especially with rents increasing at a faster rate than mortgages in many parts of the country. This will keep the market moving as we shift into 2024.
Sellers have remained optimistic about prices according to Rightmove, which reported asking prices to have risen in 2023. However, this has resulted in homes taking longer to sell – the number of sales agreed was 17% behind October 2022, which was the tail-end of the pandemic-induced buying frenzy.
This means that sellers who will see success in 2024 are set to be those who take the advice of expert estate agents to price their homes competitively from the start, thus attracting a wider pool of available buyers.
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