UK residential property market slides into 2024

Latest official property market data shows London is the UK region most impacted by house price adjustments following months of higher mortgage rates and above-target inflation.

Couple with estate agent looking happy in house
Housing availability, cost of living and affordability are currently hot topics in global mobility, especially as they underpin a successful relocation or international assignment.The latest UK House Price Index and the launch of new mortgage products suggest some small relief and better value for money may be forthcoming for homebuyers in the UK’s residential property market in 2024 and beyond; especially as private rental rates remain high in a competitive market.

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Property price falls ‘could be worse’

Newly released provisional data from the Office for National Statistics showed average UK house prices decreased by 2.1% in the 12 months to November 2023. This is a faster decline than the previous month’s decrease of 1.3% in the 12 months to October 2023.The average UK house price was £285,000 in November 2023, which was £6,000 lower than 12 months ago. Average house prices over the 12 months to November 2023 decreased in England to £302,000 (negative 2.9%), decreased in Wales to £213,000 (negative 2.4%), but increased in Scotland – home to two of the most liveable cities for expats – to £194,000 (2.2%).“A fall of around 2% in the space of 12 months is modest considering the scale of the challenges that have faced the economy,” commented Iain McKenzie, CEO of The Guild of Property Professionals. “Forecasts at the start of last year suggested prices would fall off a cliff, following significant increases during the pandemic years. "[The latest] figures show that UK house prices have decreased by £6,000 which – although will be unwelcome news to sellers – could have been much worse. Dreams of homeownership have also endured, driven in part by the demand from renters to move away from the expensive rental market.“While we saw a slight increase in inflation, it has still been more than halved since earlier last year and this should eventually trickle down to how much prospective buyers are able to save for a deposit. “High interest rates remain an obstacle for many, with repayments on some deals outstripping affordability. Lenders are becoming more competitive with their offers, but it may mean shopping around a bit more and looking beyond the rates offered by your bank.”

House price changes by UK region

Northern Ireland bucked the trend, increasing by 2.1% to £180,000 in the year to Quarter 3 (July to Sept). The North East was the English region that saw the smallest decrease in average house prices in the 12 months to November 2023 (negative 0.4%), while London saw the largest fall (negative 6.0%).Jonathan Hopper, CEO of Garrington Property Finders, said, “In England, this was the moment the slowdown turned into a slide. The average English home fell in value by £9,000 in the 12 months to the end of November, the fastest drop in prices seen since 2009, and this pulled the UK average down with it."Yet the average Scottish home rose in value by a brisk 2.2% over the same period, a gain of £4,000, and there were wide regional variations in many parts of the UK.”These trends in the UK housing market shifts are offering some buyers better value for money, especially as new mortgage deals come onto the market, he added. “The recovery remains tentative, but it’s being driven by two strong factors. The first is the growing sense that 2023’s price reset is over and that the price falls captured by official data have made many areas better value.“The second is that as the cost of borrowing continues to fall, homes are becoming more affordable. While [the] surprise uptick in consumer inflation means mortgage interest rates will now come down more slowly than many had hoped, buyers are coming back to the market and prices are stabilising as a result.”

The UK housing market in 2024

Nicky Stevenson, managing director at national estate agent group Fine & Country, is also cautiously optimistic after an encouragingly energetic start to the year in the residential property market. However, she warned further interest rates falls are not guaranteed and the situation is fast-changing.“Many forecasters have made positive predictions for house prices in 2024, underlining the property market’s resilience, and there are many reasons for cautious optimism,” she said. “Stable, or better yet, falling interest rates will help draw greater numbers of buyers to the property market — and lenders have started the year by offering increasingly competitive mortgage rates, widening affordability and increasing demand. “The property market is getting busier. They are selling to a very motivated pool of buyers who are still quick to snap up good-quality properties in desirable areas. "Despite this, there could still be some bumps along the way as today’s small rise in inflation reminds us that the economy is not out of the woods yet. The next couple of Bank of England decisions will play a big role in determining whether increased activity levels can be sustained in the early part of this year.” 

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