HOUSE prices can fluctuate based on a number of factors – but you might be wondering what will happen to them in 2024.
It is impossible to say what will happen to property prices in the future, but some things can indicate where the market is heading.
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The cost of getting a mortgage can have a major impact, as higher interest rates mean it’s more expensive to own a home.
This in turn can pull property prices down as buyers don’t have as much money to spend.
Mortgage rates tend to echo the Bank of England’s base rate, which influences how much interest banks charge on loans or pay out for savings.
The current rate remains at 5.25% after a number of successive hikes were introduced in 2022 and 2023 in a bid to slow runaway inflation.
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For now, it appears the base rate will remain at 5.25%, with experts predicting it could come down as early as March.
That would see mortgage rates fall, driving up house prices.
The other major factor in house prices is how secure we all feel in our jobs – when there’s a worry that companies could make redundancies, people tend not to make big financial commitments.
That means fewer people looking to buy homes, leaving sellers with fewer offers on their properties.
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This is known as a buyer’s market because if sellers need to move, they can be forced to accept a lower price.
If that starts happening everywhere – average house prices start to come down.
Below, we take a look at what could happen to house prices over the course of the year.
House prices
There are several different house price trackers, all of which measure something slightly different.
The official measure comes from the Office for National Statistics, which looks at the prices homes have actually sold for after they go onto the Land Register.
This is the most accurate of all the indices but the figures come out three months after the homes are sold so there’s a big time lag.
Halifax and Nationwide both publish a monthly index, tracking the average prices of homes they provide mortgages on.
While they do adjust their figures to iron out big outliers, both lenders measure average house prices based on the properties they see.
That means neither takes into account the value of homes with no mortgage – which is around one in three properties in the UK.
Their numbers are also affected by how many mortgages they approve in a month and what sort of homes happen to have been sold.
Both indices publish around a month after their customers complete their home purchase.
Zoopla also releases house price trackers each month, with their figures based largely on the listings from their own sites.
House prices now
Nationwide’s November house price index indicates house prices rose by 0.2% from the month before, however they were 2% lower than November 2022.
Halifax recorded house prices in November 2023 as rising 0.5% from the month before.
However, property prices still dropped by 1% from November 2022, with the bank saying a typical UK home now costs £283,615.
Meanwhile, Zoopla’s latest figures said house prices in December fell by 1.1% from the same month in 2022.
It said demand among buyers was 19% higher over the same time frame and new sales on properties were up 17% too.
Nathan Emerson, chief executive officer at Propertymark, said 2023 had been a “complex year” for the housing market.
He added: “Overall, the market has wrestled with high inflation and elevated interest rates and this harsh mix has brought a far more cautious approach from both buyers and sellers alike.”
Are house prices likely to go down in 2024?
It’s impossible to predict what will happen to house prices in 2024 as there are so many factors involved.
However, stubbornly high mortgage rates and inflation at 3.9% mean people are holding off on buying for now, with sales stalling.
Karen Noye, mortgage expert at Quilter, said this could see house prices fall further at the beginning of 2024.
But, she added: “Despite these ongoing pressures, low levels of housing stock and high rental costs will continue to nudge people towards buying which will likely limit any fall in house prices to a small dip as opposed to a significant drop.”
Chris Schutrups, from Southampton-based mortgage broker The Mortgage Hut, echoed Karen’s comments.
He added: “We would expect a flat market with a drop in house prices of 3-4% being at the extreme end of expectations.”
But, prices could start to rise again as 2024 wears on, if inflation falls lower and the UK economy avoids recession.
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Pete Gettins, from L&C Mortgages, said: “If we avoid recession and the Bank of England begins cutting rates earlier we could end up with prices looking strong at the end of the year.
“At the moment they look quite balanced but I wouldn’t be surprised if we saw some fluctuation throughout 2024, with a coin-toss as to whether we end up a little higher or a little lower.”
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This post first appeared on thesun.co.uk
