Prices did better than expected this year, says Halifax
Against the backdrop of broader economic challenges, UK house prices are predicted to fall by between 2% and 4% next year, following a modest decline of 1% this year.
Halifax, in its housing market review and outlook for 2024, said a partial recovery in market confidence and transaction volumes is also expected next year as interest rates ease and affordability improves.
Meanwhile, Nationwide Building Society’s own house price review and forecast indicated that a rapid rebound in house prices is unlikely in 2024, with expectations that prices will see low single digit decline or remain broadly flat next year.
“If the economy remains sluggish and mortgage rates moderate only gradually, as we expect, house prices are likely to record another small decline (low single digits) or remain broadly flat over the course of 2024,” commented Robert Gardner, Nationwide’s chief economist.
Today, the average UK house price, according to Halifax, stands at £283,615 after a fall of £2,713 from £286,328 a year ago. Prices are £44,439, or 18.6%, higher than at the onset of the pandemic and have increased by 59% over the last decade.
“UK property prices held up better than expected over the last year,” stated Kim Kinnaird, director at Halifax Mortgages. “This resilience – which owes more to the shortage of available properties for sale than strength of demand among buyers – means average house prices end the year just 3% down on August 2022’s peak of £293,025, but £44,000 above pre-pandemic levels.
“To some extent, this masks the fluctuations we’ve seen in the housing market throughout 2023. As wider economic headwinds began to bite, house prices fell for six consecutive months between April and September, before rising again later in the year as prospects improved.”
According to Kinnaird, now that inflation is falling back, financial markets are pricing in cuts to the base rate during 2024.
“Mortgage rates are already falling, with a typical five-year fixed 75% LTV deal now below 5%, having been as high as 5.7% as recently as July,” she said. “All being equal, these rates are expected to fall further over the coming months.
“Overall, with the combination of cost-of-living pressures and interest rate levels that are still much higher than even two years ago, we will likely see continued mild downward pressure on house prices. Our latest forecast suggests a fall of between 2% and 4% in 2024, though it should be noted, as with recent years, forecast uncertainty remains high given the current economic environment.”
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