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What will happen to house prices in 2024?

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According to several sources, the average UK house price at the end of 2023 was £285,000. That figure represented a drop of £4,000 on the average price in December 2022.

If property prices continue to fall, the housing market could stagnate. Sellers will be reluctant to sell and reduce the return on their investment. At the same time, many buyers will consider waiting to see if prices fall further and they get an even better bargain.

It’s impossible to know for certain and we believe that prices in this area will rise around 2-4% this year. We have already started to see some sectors of the market recovering but it is still rather patchy at the end of the first quarter. However, prices are likely to fall more than that in the first half of the year before starting to recover. In this article, we’ll discuss why this is likely to happen.

Easing of the cost-of-living crisis

You have probably been affected by the cost-of-living crisis. High levels of inflation have forced costs up and the real value of wages down. The result has been many people struggling to afford their bills. This has led to reduced interest in buying property and forced house prices downward.

Inflation now seems to be easing and it seems likely that during the second half of 2024, we will start to see an end to this position. This will continue to help to inspire confidence in buyers and encourage them to return to the property market. The increase in demand will encourage sellers to list their property, helping to balance supply and demand, minimising the overall property price change.

Mortgage rates will remain stable

Mortgage rates increased significantly as the government started to raise interest rates in 2022. However, the rates levelled toward the end of the year and started to fall which continued into 2024.

While it seems unlikely that interest rates will return to the lower levels of early 2022, the volatility in the market appears to have settled. This will make it easier for buyers to calculate affordability and commit to a house purchase.

In short, as the year progresses, we should see 4-5 base interest rate cuts with it levelling off at or close to 4%, and buyer confidence will grow, increasing demand.

Increased choice

In the second half of 2024, we’re likely to see an increase in buyer interest. However, many will still be cautious due to the recent economic position. As sellers regain confidence, buyers will find there are more properties in their desired area. These buyers are likely to take their time choosing and, thanks to the available choice, they will be in a strong negotiating position.

This will effectively act as a cap, preventing UK house prices from climbing too quickly.

Summing up

It’s impossible to know exactly what will happen in the property market. However, our years of experience suggest there will still be opportunities for buyers and sellers throughout the year.

Whether you’re thinking about buying or selling, you need to find a reliable estate agent who can help you with the value of your home or affordability of your next home. Start by contacting Hearnes. Our specialist team can help guide you through every step of the process.

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