January 8, 2024 10:49 am

Insert Lead Generation
Nikka Sulton

Exercise caution, as analysts advise landlords and housing market enthusiasts against excessive celebration following the latest Halifax index figures. According to the lender, there’s been a 1.1% increase in property prices in December, marking the third consecutive monthly rise. This results in a 1.7% overall growth in property prices throughout the entirety of 2023. The current average cost of a UK home now stands at £287,105, reflecting a modest increase of just over £3,000 compared to the previous month.

In light of these figures, it’s crucial to approach the market with discernment. While the consecutive monthly rises indicate some positive momentum, the overall growth percentage suggests a more measured uptick in property values. The average UK home’s incremental increase of just over £3,000 signals a relatively steady progression rather than an exuberant surge. As the housing landscape continues to evolve, maintaining a balanced perspective becomes essential for landlords and market observers alike.

Despite optimistic indicators, Sarah Coles, head of personal finance at Hargreaves Lansdown, underscores the likelihood of 2024 posing challenges in the property market. Contrary to anticipating a sales bonanza, she points out that the scarcity of buyers and a sluggish pace in property transactions dampen the prospects. The trend persisted in November, marking the third consecutive month of decelerating sales and resulting in the slowest November in a decade. This reality underscores the nuanced nature of the market, suggesting that a mere rise in property prices on paper may not necessarily translate to tangible benefits for sellers if the pool of potential buyers remains limited.

In navigating the landscape of 2024, sellers are urged to approach the market with a measured perspective. While positive data hints at a market shift, the persisting challenges, as highlighted by the deceleration in sales, necessitate a cautious approach. As the property market grapples with a sluggish momentum and a shortage of buyers, sellers should weigh the implications of market dynamics. This dynamic landscape demands a nuanced understanding, emphasizing that a comprehensive assessment of the market conditions is crucial for sellers to make informed decisions in the face of the challenges that 2024 might bring.

The good news is that falling mortgage rates could well inject a little more enthusiasm into the market, Bank of England figures show that more than 50,000 mortgages were approved in November, and while that’s still well below a typical month of 60,000, it has come off the bottom. Mortgage rate cuts in the months since – which have seen two-year rates fall below six per cent – may well help inspire more buyers.

“But like a dodgy prawn at a buffet, there’s bad news lurking that could spoil the whole thing. Halifax has joined the forecasters expecting house prices to fall in 2024. In an environment of higher interest rates, the global economy is slowing, and there’s every chance that economic threats from unemployment to a slowing of wage rises and sticky inflation could put pressure on house prices as we go further into 2024. 

“It means anyone with a property on the market has a golden opportunity to sell in the next few months, and should consider that carefully when setting a price. If all this persuades you to keep your property plans on hold for another year, it’s worth thinking carefully where your deposit is sitting in the interim.”

Fred Jones, Chief Operating Officer at UPSTIX, points out a positive medium-term outlook for the housing market, following a record number of property listings on Boxing Day. Many lenders are engaging in a mortgage price war, anticipating interest rate cuts sooner rather than later. However, Jones acknowledges that demand is expected to remain low until the middle of the year when the predicted rate cuts by the Bank of England are anticipated to take effect.

On the flip side, Mark Harris, Chief Executive of mortgage broker SPF Private Clients, provides a more tempered perspective. He mentions that while those remortgaging this year may still experience payment increases, the impact may not be as severe as initially feared.

“The housing market saw a remarkably strong finish to the year, as buyer and seller confidence was boosted by three consecutive interest rate holds and the growing belief that the next move in rates will be downwards.

“Increased competitiveness among lenders leads to lower mortgage rates and we find ourselves in the midst of a price war. With HSBC launching the headline-grabbing 3.94 per cent five-year fix and reductions from Halifax, NatWest, TSB and other lenders, the gloves really are off. 

“With 2023 being a disappointing year in terms of amount of business done, lenders are keen to get this year off to a cracking start. Increased competition, rates aside, may also lead to lenders broadening criteria to attract business with longer mortgage terms or greater flexibility to allow certain variable incomes.  It is great news for borrowers who have struggled with affordability over the past few months as they may now be able to achieve their target loan amount where they couldn’t before.”



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