As we look towards 2024, the housing market presents a landscape shaped by the challenges and adaptations of the past year. Despite rising mortgage and interest rates impacting affordability, the market has maintained better-than-expected stability in asking prices and buyer demand. Here’s an in-depth analysis of what we might expect for house prices in the coming year.

Review of 2023: A Surprisingly Stable Market

Contrary to our forecast of a 2% drop in average new seller asking prices for 2023, the market demonstrated resilience with only a 1.1% year-on-year decrease. The average asking price in Great Britain now stands just above £355,000.

Predictions for 2024: A Modest Adjustment in Asking Prices

Looking ahead to 2024, we anticipate a return to more stable market activities following the hectic post-pandemic period.

Tim Bannister from Rightmove comments: “While we expect a muted year for the market in 2024, the solid demand at the right price points to a limited drop in prices. The market’s resilience this year indicates a sustained buyer interest in fulfilling housing needs, despite challenges.”

Local Market Dynamics: A Mixed Picture

The housing market comprises numerous local markets, each with its unique supply and demand dynamics. While some areas may experience a more pronounced dip in asking prices, others with fewer homes for sale could see prices stabilise or even slightly rise.

In certain regions where sellers face affordability-stretched buyers or need to sell swiftly, more competitive pricing is likely.

Selling in 2024: The Importance of Pricing

With sales agreements down 10% from the more typical market of 2019, and a significant rise in properties experiencing price reductions during marketing, setting a competitive asking price will be crucial in 2024. The average time to find a buyer has increased, and those who price their homes competitively are more likely to secure a sale efficiently.

Mortgage Rates: A Stabilising Factor

Mortgage rates have been steadily declining since July, offering more stability to home-movers. The average two-year fixed rate is currently 5.48%, while the five-year rate sits at 5.07%. This calmer mortgage landscape may encourage those who paused their plans in the last year to re-enter the market, now able to better predict their affordability.

However, with the Bank of England indicating that Base Rate cuts are not imminent, interest rates are expected to remain elevated in 2024, continuing to challenge some buyers’ budgets.

Increased Choices for Buyers

The upcoming year is likely to offer buyers a broader range of housing options compared to the limited inventory of the pandemic years. This increased choice, coupled with fewer buyers, will position buyers to negotiate on price and select homes that truly meet their needs.

Despite the return to pre-pandemic levels of housing stock, a surplus of listings creating an excess supply is unlikely. Consequently, sellers who price their properties competitively will stand out to prospective buyers.

Conclusion: A Balanced Market in 2024

As we navigate through 2024, the housing market is expected to balance out, with more choices for buyers and a need for strategic pricing from sellers. Understanding these trends will be key for both buyers and sellers to make informed decisions in a market that, while calmer, still presents its unique challenges and opportunities.