IF you’re looking to move home, or get a foot on the property ladder, it’s only right to be curious about what could happen to house prices.
It is impossible to say what will happen to property prices in the future, but some things can indicate where the market is heading.
1
The cost of getting a mortgage can have a major impact, as higher interest rates mean it’s more expensive to own a home.
This in turn can pull property prices down as buyers don’t have as much money to spend.
Mortgage rates tend to echo the Bank of England’s base rate, which influences how much interest banks charge on loans or pay out for savings.
The current rate remains at 5.25% after four consecutive meetings.
It comes after a successive hikes were introduced in 2022 and 2023 in a bid to slow runaway inflation.
While lenders had expected the base rate to fall within the first half of this year, this has now been pushed back after inflation remained at 4% in January.
Experts are also warning potential buyers that mortgage rate changes could be on the way in the coming weeks after figures revealed that the UK fell into recession at the end of last year.
Some lenders have already been increasing their rates, including Nationwide.
The building society increased its mortgage rates by up to 0.25 percentage points.
It said it took the decision due to a rise in swap rates, which lenders use to price fixed-rate mortgages.
Santander also announced a small increase to some of its fixed-rate products at the end of January.
The other major factor in house prices is how secure we all feel in our jobs – when there’s a worry that companies could make redundancies, people tend not to make big financial commitments.
That means fewer people looking to buy homes, leaving sellers with fewer offers on their properties.
This is known as a buyer’s market because if sellers need to move, they can be forced to accept a lower price.
If that starts happening everywhere – average house prices start to come down.
Below, we take a look at what could happen to house prices over the course of the year.
House prices
There are several different house price trackers, all of which measure something slightly different.
The official measure comes from the Office for National Statistics, which looks at the prices homes have actually sold for after they go onto the Land Register.
This is the most accurate of all the indices but the figures come out three months after the homes are sold so there’s a big time lag.
Rightmove, Halifax and Nationwide all publish a monthly index, tracking the average prices of homes they provide mortgages on.
While they do adjust their figures to iron out big outliers, both lenders measure average house prices based on the properties they see.
House prices now
Rightmove said the average price tag on a home jumped by more than £3,000 month-on-month in February.
Across Britain, the average new seller asking price increased by 0.9% or £3,091 this month to £362,839.
The average asking price is also up by 0.1% compared with a year earlier, following a period of annual falls in every month since August 2023.
Rightmove said properties that are over-priced are being left on the shelf by price-sensitive buyers.
The website’s analysis indicates that sellers who price correctly initially are far more likely to find a buyer and sell their property faster.
Meanwhile, Zoopla expects house prices to fall by 2% in 2024 across the UK, but exactly how this affects individual UK homeowners will depend on the location.
Are house prices likely to go down in 2024?
It’s impossible to predict what will happen to house prices in 2024 as there are so many factors involved.
Rosie Hooper, chartered financial planner at Quilter Cheviot, said house prices could rise later if interest rates are cut.
She said: “The ongoing competition among lenders and serious lack of housing supply is likely to keep house prices buoyant and if and when interest rates are cut, it’s likely the property market will be off to the races again.
Meanwhile, Nick Mendes, technical manager at John Charcol mortgage advisers, said sellers will still need to price competitively.
He added: “Mortgage rates have steadily reduced, first time buyers and home movers are now reengaging with the market.
“Those who held back due to previous concerns now see it as the perfect time to make the move.
“But it is important to stress though that we are seeing two types of sellers – those that pricing their property competitively in line with market conditions and those that are still holding out for the highs of 2022.
“It’s important for sellers to be price sensitive but not to put off potential buyers.”
Do you have a money problem that needs sorting? Get in touch by emailing money@the-sun.co.uk.
Plus, you can join our Sun Money Chats and Tips Facebook group to share your tips and stories.
