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House prices rise for third month in a row but set to fall in 2024

House prices rise for third month in a row but set to fall in 2024
Rebecca Goodman
Written By:
Rebecca Goodman

Property prices rose 1.1% in December, to an average of £287,105, but they are predicted to fall this year.

The December rise of just over £3,000 was the third in a row, according to the latest Halifax data, and despite months of price drops last year, it said house prices were up 1.7% across 2023.

Yet the picture remains uncertain and it predicts house prices to fall this year, by between 2 and 4%.

Home sales were down in November, by 1.2% from October, according to data from HM Revenue and Customs (HMRC) while the number of mortgages approved increased, by 4.6% to 50,067, according to the Bank of England (BoE).

Geographically, prices in Northern Ireland were the strongest performing, with property prices up 4.1% annually. A property here now costs an average of £192,153, a yearly rise of £7,595.

Property price growth in Scotland was also up, with houses now at £205,170 on average, a 2.6% or £5,277 rise.

The biggest fall in property prices was in the South East, where prices fell by 4.5% to an average of £376,804. London remained the top spot for the value of property but prices here dropped by 2.3% annually.

It comes as further cuts to mortgage rates are expected and mortgage approvals rise in November, according to the Bank of England.

Kim Kinnaird, director of Halifax Mortgages, said: “The growth we have seen is likely being driven by a shortage of properties on the market, rather than the strength of buyer demand. That said, with mortgage rates continuing to ease, we may see an increase in confidence from buyers over the coming months.

“As we move through 2024, the UK property market will continue to reflect the wider economic uncertainty and buyers and sellers are likely to be naturally cautious when considering making a move.

“While wage growth is now above inflation, helping to ease cost of living pressures for some and improving housing affordability, interest rates are likely to remain elevated for as long as inflation remains markedly above the Bank of England’s target.”

‘This doesn’t mean a sales bonanza’

Sarah Coles, head of personal finance for Hargreaves Lansdown, said: “Prices defied all expectations, posting a positive return in 2023, after a shortage of properties on the market encouraged prices higher. Things had looked dire after six months of consecutive falls, so three months of price rises will have raised the spirits of sellers.

“This doesn’t mean a sales bonanza, because buyers are still thin on the ground, and property is shifting very slowly. Sales actually slowed for the third consecutive month in November, delivering the slowest November in a decade. It means that a rise on paper may not actually do sellers much good in reality if there’s nobody to buy their property.”

‘2023 was an incredibly tricky year’

Karen Noye, mortgage expert at Quilter, said: “As we look ahead to the rest of 2024, the housing market turmoil seen over the past couple of years is expected to dissipate further.

“Many lenders have been reducing their mortgage rates as swap rates have lowered, and lower transaction levels have prompted a healthy competition between lenders vying for business.

“2023 was an incredibly tricky year for the housing market as high interest rates and cost of living pressures saw many put house purchases on hold, but it appears to have weathered the storm well. Though Halifax has predicted a fall in house prices of between -2% and -4%, the overall outlook for 2024 remains relatively optimistic.

“Affordability will still be challenging this year given higher interest rates, but a reduction in mortgage rates has already started to materialise and those looking to secure a fixed rate mortgage may find that deals continue to become more palatable in the coming weeks and months, though rates will still be much higher for those coming off long term deals from the period of very low interest rates.”

‘Slow and steady rather than spectacular’

Matt Thompson, head of sales at Chestertons, said: “UK house prices will experience a slight decline of -0.3% over 2024, while London prices will show growth of 1.8% due to the higher number of cash buyers that are less affected by the higher interest rates.

“The prospect of a slightly stronger economic outlook from 2025 feeds through to a more meaningful uplift in house prices. The agency forecasts that this will result in growth of between 3.5% and 4.5% across London and the UK. However, any house price growth is more likely to be slow and steady rather than spectacular.”