UK

House prices predicted to rise in 2024

house prices rise

The property company had predicted in November that it expected the average price of a home to drop by 3% this year because recent hikes in the BoE base rate had heightened the affordability pressures on prospective buyers

A decline in mortgage rates has prompted a forecaster to reverse its forecasts of a drop in UK house prices in 2024, instead suggesting the average cost of a property could increase by £61,500 over the next five years.

The property company Savills had predicted in November that it expected the average price of a home to drop by 3% this year because recent hikes in the BoE base rate had heightened the affordability pressures on prospective buyers.

However, although the base rate stays at 5.25%, competition among mortgage lenders has forced the cost of borrowing down since, prompting more activity in the market. As a result, Savills now expects the average price to increase by 2.5% in 2024 to £292,000.

Although it has adjusted some of its longer-term predictions downwards, it said it expected growth every year up to the end of 2028, when it forecasts average prices will have increased by £61,500, or 21.6%, to £346,500.

The number of homes it expects to change hands this year has also been revised upwards, from 1.01 million to 1.05 million.

Lucian Cook, the head of residential research at Savills, said: The outlook for 2024 has improved since our last (November 2023) predictions as mortgage costs have dropped marginally and are much less volatile. The outlook for economic growth has also marginally improved, pointing to relatively modest house price growth this year, with greater potential over the following few years.

It is widely believed that the BoE base rate has reached a peak, but while some economists forecasted a cut as early as March, at their last meeting policymakers voted to wait to make sure inflation continues to drop, and they are expected to again hold rates when they meet this Thursday.

Cook said a 75% two-year fixed-rate mortgage from Nationwide building society priced in November at 5.35% had dropped to 4.84% this month, while a five-year deal had declined to 4.5%.

Those deals are no longer available as Nationwide and several big lenders have repriced deals upwards in recent weeks, but rates are still below November’s prices.

Disclaimer: The opinions expressed by our writers are their own and do not represent the views of Invest for Property. The information provided on Invest for Property is intended for informational purposes only. Invest for Property is not liable for any financial losses incurred. Conduct your own research by contacting financial experts before making any investment decisions.

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