House prices are predicted to fall by between 2% and 4% in 2024, Halifax’s Housing Market Review and Outlook for 2024 has revealed.
According to the review, pressure on household finances – notably from inflation and higher interest rates – has impacted housing affordability, leading to fewer completions.
A partial recovery in market confidence and transaction volumes was projected in 2024, as interest rates ease and affordability improves.
The review also revealed that the average house price is now £283,615, compared with £286,328 a year ago, marking a fall of £2,713.
Therefore, the UK’s annual house price growth was recorded at -1.0% (year to November).
Property prices for homes bought by first-time buyers recorded slight growth (+0.5%) over the past year, while the amount paid by home-movers fell by 1.7%.
Northern Ireland saw the highest rate of annual property price inflation of any UK region or nation in the year to November 2023, at +2.3%.
The South East of England recorded the biggest decrease, down by 5.7%.
Kim Kinnaird, director of Halifax Mortgages, said: “UK property prices held up better than expected over the last year, falling by just -1.0% on an annual basis, to now sit at £283,615.
“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 (£293,025) but £44,000 above pre-pandemic levels.
“Looking ahead, now that inflation is falling back, financial markets are pricing in cuts to Base Rate during 2024.
“Mortgage rates are already falling, with a typical 5-year fixed 75% loan-to-value (LTV) deal now below 5%, having been as high as 5.7% as recently as July. All being equal, these rates are expected to fall further over the coming months.
“However, while pay growth is now above inflation – beginning to ease the cost of living squeeze for some – other factors will continue to weigh on households’ spending power next year.
“Economic growth is expected to remain weak, with unemployment rising and frozen tax thresholds limiting any increase in take home earnings.”
Kinnaird added: “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.”
