House price inflation, which stood at a buoyant 9.6% a year ago, has now receded to -1.1%, according to Zoopla’s House Price Index for October.
The data shows that house prices are in decline in 80% of local housing markets. However, robust mortgage lending regulations have shielded the market, even though household purchasing power remains on the lower side.
Looking forward, predictions suggest that UK house prices might decline by 2% in 2024. Yet, an expected rise in incomes might ease property affordability. The property market could see about 1 million sales in 2024, and this figure might climb if mortgage rates drift back to around 4%.
Richard Donnell, executive director of research at Zoopla, said: “Our forecasts for the housing market a year ago were more optimistic than many others. It’s now looking like we called it right, with 1 million transactions and house price falls of up to 5% in 2023.
“These lower house price falls mean the adjustment to higher mortgage rates will run in 2024. And this transition is not a quick one.
“Mortgage rates look set to remain higher for longer so income growth is key to reset housing affordability and support sales.”
Nathan Emerson, CEO at Propertymark, added: “Many first-time buyers and cash buyers are still entering the market, as the Zoopla House Price Index shows they make up two in every three buyers.
“It is extremely positive to see this demographic having the confidence and ability to step into the housing market once again.
“Currently, cost-of-living related issues continue to impact the housing market overall and sales in some segments remain delicate, however rising incomes should help boost housing affordability across the next 12 months.
“Propertymark remains keen to see a continued falls in inflation rates and for this to translate into reduced interest rates to fully reignite sales volumes.”
