Sunday, February 25, 2024
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UK house prices on track to rise in 2024

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After a year of sustained price declines in 2023, the global property consultancy Knight Frank said it was updating its forecast for UK house prices to increase by 3% in 2024, up from an earlier estimate of a 4% decline

UK house prices are on track to beat forecasts of a decline in 2024, a leading estate agent has said, as a mortgage pricing war and expectations of BoE interest rate reductions rekindle the property market.

After a year of sustained price declines in 2023, the global property consultancy Knight Frank said it was updating its forecast for UK house prices to increase by 3% in 2024, up from an earlier estimate of a 4% decline.

Against a backdrop of dropping inflation and growing expectation of interest rate reductions, it said it expected that rising mortgage approvals seen in recent months would translate into at least a 10% rise in transactions this year.

The online property website Rightmove said asking prices for new sellers had increased by an average 1.3%, or £4,571, between December and January, the biggest rise for the time of year since before the pandemic.

While prices overall remain 0.7% lower than a year back, it said there had been a “tentatively promising” start to the year, with 15% more new properties coming on to the market, and growing buyer demand. Around 20% more sales were agreed at the start of January than at the same time a year back, suggesting returning confidence, it said.

Since Christmas, Rightmove said it had seen nine of its 10 busiest days on record for people getting a mortgage in principle to see what they can afford to borrow.

Banks, building societies and estate agents had earlier all forecasted declining house prices for 2024, but a succession of unexpected monthly rises in the past three months and a larger-than-expected drop in the official UK inflation rate has prompted a reassessment.

Mortgage deals for those hoping to buy have become marginally cheaper, after rates increases sharply in the wake of Liz Truss’s mini-budget of autumn 2022. A five-year fixed-rate mortgage now averages 4.86%, compared with 6.11% in the July 2023 peak, and rates are widely expected to drop further.

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