March 18, 2024 4:29 pm

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Nikka Sulton

If you’re considering buying or selling a home in 2024, it’s essential to stay informed. Recent reports indicate an uptick in housing market activity, with some suggesting potential price increases. However, it’s crucial not to get overly optimistic.

Despite the positive trends, our data indicates that we’re still in a buyer’s market nationally. While prices haven’t seen significant declines over the past year, they’re yet to adjust to higher mortgage rates, which have risen substantially since 2021.

As mortgage rates are expected to stabilize around 4%-4.5% later this year, sellers should remain pragmatic about pricing their properties. Seeking guidance from estate agents on preparing homes for sale can help ensure realistic expectations in the current market.


Key takeaways

  • The current market dynamics suggest that we’re still in a buyer’s market, making it improbable for prices to increase nationally in 2024.
  • Despite significant increases in mortgage rates since 2021, house price declines remained moderate throughout 2023.
  • However, buyers continue to be cautious about prices, with 45% of mortgage holders yet to transition to higher rates.
  • Persistent inflation implies that mortgage rates may have limited room to decline further.
  • On average, UK sellers are accepting offers close to 95% of the asking price, underscoring the importance for sellers to maintain realistic pricing strategies.


Return of pent-up demand after weak 2023

Home demand saw a notable surge at the onset of January as pent-up demand from the previous year, 2023, resurfaced. This resurgence was largely fueled by the downward trend in mortgage rates, prompting prospective buyers to actively explore the market. Currently, more than 75% of all listed homes are featured on Zoopla, indicating a robust presence of available properties in the market.

Analysis reveals that buyer demand has surpassed pre-pandemic levels by a considerable margin, with figures showing a 10-15% increase compared to the years 2017-2019. This uptick in interest also exceeds the demand recorded at the beginning of 2023, marking a significant shift in market dynamics. Despite these positive indicators, it’s noteworthy that current demand levels still fall short of the peak witnessed during the heightened pandemic years of 2020-2022.

It’s evident that the housing market is witnessing a resurgence in activity, buoyed by favorable factors such as declining mortgage rates and pent-up demand. However, while buyer interest has notably increased, it’s essential to acknowledge that demand levels have not fully rebounded to the unprecedented highs experienced during the peak pandemic years. This nuanced understanding underscores the evolving nature of the housing market and the need for cautious optimism amid ongoing fluctuations.


Plenty of choice for buyers will keep price rises in check

Despite the resurgence of buyers in the housing market, there has been a notable increase in the number of homes available for sale. This expanded inventory of homes is likely to temper the potential for price increases in 2024.

During the pandemic years, one notable characteristic was the persistent shortage of homes for sale, which contributed to accelerated price growth. At its lowest point, there were just 14 homes per estate agent in late 2022.

However, the current supply situation presents a stark contrast, with inventory levels more than double those lows, averaging around 30 homes for sale per agent. This figure is closer to the pre-pandemic average, indicating a significant shift in market dynamics.

Additionally, there’s been an uptick in the availability of larger family homes with four or more bedrooms. Some sellers are relisting properties that may have previously struggled to attract interest in 2023, contributing to the increased supply of such properties in the market.

Throughout 2023, increased supply and weakened demand prompted a gradual repricing of homes listed for sale, as sellers sought to adjust asking prices downwards to stimulate interest.

This trend intensified in the latter half of 2023, coinciding with the impact of higher mortgage rates on buyers’ purchasing power.

In January 2024, there has been a resurgence in asking price reductions for listed homes, indicating ongoing adjustments in response to elevated borrowing costs.

While not reaching the levels observed at the same time last year, these reductions surpass those seen in previous years, prompting sellers to collaborate with their agents to determine the optimal pricing strategy to reignite buyer interest.


Half of owners with a mortgage still need to move onto higher mortgage rates

Buyers remain cautious about prices, and many homeowners with mortgages have yet to switch to higher rates. 

According to the Bank of England, approximately 55% of mortgage holders (around 5 million) have refinanced since the rise in rates began in late 2021. 

The expectation is that an additional 5 million households will be affected by higher mortgage rates by 2026. 

For the average homeowner coming off a fixed-rate deal between mid-2023 and late 2026, monthly mortgage payments could rise by around £240, or roughly 39%. 

While declining mortgage rates offer some relief, the impact on repayments is lessened. 

However, for prospective buyers seeking to upgrade to larger properties or better locations, this translates to higher costs and larger loans, resulting in increased monthly payments. 

Despite strong competition among lenders, the slower-than-anticipated decline in inflation is expected to temper the drop in mortgage rates. 

As a result, the affordability of mortgages will continue to be a key consideration for buyers, contributing to price stability even amid falling rates.


It’s still a buyers market and sellers need to price carefully

On average, UK sellers are agreeing to offers below their asking price, with the typical discount being around 5%.

This figure is slightly lower than the historical average and significantly lower than the competitive market seen during the pandemic.

While this discount isn’t increasing, indicating limited price drops, it underscores the importance for sellers to set their prices strategically to stimulate demand.

Zoopla House Price

The percentage of sellers achieving their listed prices differs across the UK, with slightly larger discounts observed in southern England.

In these areas, where prices tend to be above the national average, the effect of increased mortgage rates on pricing has been more pronounced compared to other regions.


How should sellers and buyers respond to the positive start to 2024?

The positive momentum at the beginning of 2024 is expected to bolster market confidence, prompting increased participation from both buyers and sellers.

However, sellers should temper their expectations regarding the value of their homes in 2024 compared to 2023. It’s crucial to align pricing with the preferences of potential buyers in the local market.

For instance, while first-time buyers are anticipated to play a significant role in the market this year, their focus may not be on larger homes, which are experiencing higher levels of supply. Conversely, upsizers seeking larger properties may face challenges securing financing at elevated mortgage rates compared to previous years.

Data from Zoopla indicates that buyers from more expensive areas are expanding their search radius to find properties offering better value for money.

While a sudden surge in house prices is not expected in 2024, increased demand coupled with realistic pricing strategies is likely to stimulate housing sales and overall market activity.




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