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House price forecasts for 2024 range from staying flat to a 5% fall
Upmarket estate agent says prices will start to bottom out in 2024 as interest rates fall and will return to growth in 2025.
Savills expects the Bank of England to start cutting interest rates in the second half of 2024, reducing its base rate to 4.75% by the end of that year, from 5.25% now. The property company forecasts rates will fall to 1.75% in 2027.
The real estate market has exceeded expectations this year, demonstrating resilience with lower-than-predicted declines in asking prices and sustained demand for appropriately priced homes. Despite these positive trends, the increasing rates of mortgages and interest have introduced challenges to the affordability of potential homebuyers looking to make a move.
A year ago, forecast suggested a 2% drop in average new seller asking prices for 2023, yet prices are currently only 1.1% lower year-on-year. The current average asking price for a home in Great Britain stands just above £355,000.
What Lies Ahead for Asking Prices in 2024?
As the housing market gradually returns to a more normalised state post the pandemic frenzy, our prediction for the end of 2024 is a 1% national decrease in average new seller asking prices. This projection is driven by heightened competition among sellers vying to secure a buyer.
Regional Variations in Asking Prices
The expected decline in new seller asking prices will be experienced differently across various regions of Great Britain. In areas with limited homes available for sale, prices may remain steady or even see a slight increase compared to the current year. Tim Bannister suggests, “In regions where sellers face challenges attracting affordability-stretched buyers or need to sell promptly due to changing circumstances, competitive pricing is likely to be even more prevalent.”
Key Considerations for Sellers in 2024
Sales agreements are currently 10% lower compared to the more typical market conditions of 2019. This year, 39% of properties have undergone asking price reductions during marketing, a noticeable increase from 29% last year and 34% in 2019. The average time for a seller to secure a buyer has risen from 45 days a year ago to 66 days currently. Sellers who adopt competitive pricing strategies have observed quicker success in finding buyers.
Mortgage Rates and Affordability Outlook
Average mortgage rates have steadily declined since July, providing homebuyers with increased stability and certainty regarding the type and cost of mortgage offers. The average two-year fixed rate stands at 5.48%, while the five-year rate is 5.07%. Despite the improvement in mortgage market stability, affordability remains stretched for many homebuyers. The Bank of England Base Rate is expected to remain elevated in 2024, limiting some homebuyers’ spending power.
Increased Choices for Homebuyers
In 2024, homebuyers are expected to encounter a more favourable market with a greater selection of homes that meet their needs. The scarcity of available stock in recent pandemic years is easing, providing buyers with more negotiation power and time to choose the right home.
However, the number of homes for sale has only recently returned to pre-pandemic levels, and there is no indication of an imminent surge in new listings that could lead to an oversupply. Sellers willing to price competitively will attract attention in a market with increased choices and fewer buyers.
Sources: rightmove.co.uk, thisismoney.co.uk, theguardian.co.uk
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