Following recent house price drops and with further falls expected in 2024, many buyers will be wondering whether the time is right to get onto or move up the property ladder.
The UK property market has experienced “lower-than-expected falls in asking prices” this year, according to Rightmove, with house prices currently down by 1.3% year-on-year.
The property website is predicting a further 1% fall in 2024, but warned that higher mortgage and interest rates are still “stretching the affordability” of buyers.
What has happened in the property market in 2023?
House prices have fallen for much of this year, as high interest rates and mortgage costs dampen demand.
According to Zoopla, sellers are now offering the “biggest discounts in five years” on property listings, putting buyers in a “strong negotiation position”.
Yet property sales have also experienced a “marked drop-off” in 2023, Which? said. HMRC figures show a “hefty drop” in transactions in October, with an estimated total of 90,920 – down by 17% year-on-year and 2% lower than in September.
The number of sales being agreed by estate agents is 10% lower “than at this time in the more normal market of 2019”, said Rightmove.
Will the housing market recover in 2024?
Some parts of the UK will feel the expected drop in prices “more keenly” than others, said Rightmove. Prices may “remain flat, or even very slightly increase”, in areas with low housing supply, the site added, but “pricing will be key”.
Getting the price right at the first listing “maximises the initial impact”, said Yahoo! Finance, and gives sellers a “much greater likelihood of a successful sale”.
There are “varying forecasts”, said Which?, on the extent of the expected overall drop in house prices. Estate agents Knight Frank predict a 5% fall in 2024, while analysts at Capital Economics expect prices to plummet by 12% by the middle of next year.
The latest forecast from the Office for Budget Responsibility predicts that prices will have dropped by the end of 2024 to a level that is 7.6% below the peak recorded in late 2022, but will then begin climbing again.
Even if prices do drop significantly, affordability is likely to continue to be an issue for many would-be buyers. The Bank of England has signalled that interest rate cuts are “not imminent”, said Rightmove, so borrowing costs are likely to “remain elevated” during 2024.
Should would-be buyers wait or act now?
Buying during uncertain times can “feel more risky”, said Tembo Money, but buyers could benefit from less competition as others are “resistant to take the plunge”.
All the same, said The Times Money Mentor, first-time buyers, in particular, may be waiting for house prices to “fall further to make it more affordable to buy”. And while they might “save money on the purchase price” by acting now, high mortgage costs could “cancel out” any savings.
But on the other hand, the site continued, while rental costs are soaring, mortgage costs have “dipped slightly” in recent months. If this downward trend continues, prospective buyers may face the “ideal combination of lower house prices and mortgage rates” towards the end of 2024.
Of course, there are no guarantees about the direction of property prices and mortgage rates, and whether to buy or hold off will depend on each buyer’s personal circumstances.
Zoopla predicted that in the run-up to Christmas, the number of homes for sale will decline as “some sellers take their properties off the market with a view to relaunching in the new year”.
But “it will remain a buyers’ market in 2024”, the site added, with no rise in house prices likely “any time soon”.
Rightmove is predicting a 1% fall in asking prices next year
