Will house prices fall in 2024?
IF you're looking to move or get your foot on the property ladder, it's only good to be curious about what might happen to house prices.
It's impossible to say what will happen to real estate prices in the future, but some things could indicate where the market is going.
The cost of taking out a mortgage can have a big impact because higher interest rates mean it's more expensive to own a home.
This in turn can cause property prices to fall as buyers do not have as much money to spend.
Mortgage rates often resemble the Bank of England's base rate, which influences the level of interest banks charge on loans or pay out on savings.
The current rate remains at 5.25% after four consecutive meetings.
It comes after successive hikes were introduced in 2022 and 2023 in an attempt to slow runaway inflation.
While lenders had expected the base rate to fall in the first half of this year, it has now been pushed back after inflation remained at 4% in January.
Experts are also warning potential buyers that changes to mortgage rates could be on the way in the coming weeks, after figures showed Britain entered a recession late last year.
Some lenders have already increased their rates, including Nationwide.
The mortgage bank increased the mortgage interest rate by a maximum of 0.25 percentage points.
The company said it made the decision because of a rise in swap rates, which lenders use to price fixed-rate mortgages.
Santander also announced a small increase in some of its fixed income products at the end of January.
The other major factor in home prices is how secure we all feel in our jobs. When there is fear that companies will have to make layoffs, people tend not to make major financial commitments.
That means fewer people want to buy homes, meaning sellers get fewer offers on their properties.
This is known as a buyer's market because, if sellers have to move, they may be forced to accept a lower price.
If that happens everywhere, average house prices will start to fall.
Below we look at what could happen to house prices during the course of the year.
House prices
There are several house price trackers, each measuring something different.
The official measure comes from the Office for National Statistics, which looks at the prices houses actually sold for after they were registered in the land register.
This is the most accurate of all the indices, but the figures come out three months after the houses are sold, so there is a big lag.
Rightmove, Halifax and Nationwide all publish a monthly index, tracking the average prices of the homes they mortgage.
While they do adjust their numbers to eliminate major outliers, both lenders measure average home prices based on the properties they see.
House prices now
Rightmove said the average price tag on a house rose by more than £3,000 month-on-month in February.
Across Britain, the average asking price for new sellers rose by 0.9% or £3,091 this month to £362,839.
The average asking price also rose 0.1% from a year earlier, following a period of annual declines in every month since August 2023.
Rightmove said properties that are overpriced are being left on the shelf by price-sensitive buyers.
The website's analysis shows that sellers who price correctly initially are much more likely to find a buyer and sell their property faster.
Meanwhile, Zoopla expects house prices to fall by 2% across Britain by 2024, but exactly how this will affect individual British homeowners will depend on location.
Are house prices likely to fall in 2024?
It's impossible to predict what will happen to home prices in 2024 because there are so many factors involved.
Rosie Hooper, a financial planner at Quilter Cheviot, said house prices could rise later if interest rates are cut.
She said: 'Ongoing competition between lenders and the severe lack of housing supply are likely to keep house prices high and if and when interest rates are cut, it is likely that the property market will be back in the race.
Meanwhile, Nick Mendes, technical manager at John Charcol mortgage advisers, said sellers will still have to price competitively.
He added: “Mortgage rates have been steadily reduced, with first-time buyers and home movers now re-entering the market.
“Those who were reluctant due to previous concerns now see this as the perfect time to make the move.
“But it is important to emphasize that we are seeing two types of sellers: sellers who are pricing their properties competitively in line with market conditions, and sellers who are still holding on to 2022 highs.
“It is important that sellers are price sensitive, but do not deter potential buyers.”
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