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Even though we are still in the very early stages of the new year a lot has already been said on what the UK housing market has in store for us. From well-known economists to big-name lenders to prospective buyers, everyone seems to have an opinion on what to expect for the upcoming year in regard to what will happen to house prices and the housing market as a whole.

What happened to UK house prices in 2023?

Before looking forward, let’s look back at what happened last year. To describe the 2023 market as turbulent is probably an understatement. While the facts and figures actually show that house prices fell across the UK last year by as much as 2.7% in some areas [1], you’ll know better than anyone that many prospective buyers didn’t have the confidence or financial buffer to buy their first home or move to another. This was evident in the fact that mortgage lending was incredibly weak over the year, particularly during the third quarter of 2023 [2].

What will happen to house prices in 2024?

As we are still in the early stages of 2024, it’s hard to have a definitive stance on what to expect in regard to forecasting house prices over the coming year. There is still plenty of uncertainty around the BoE base rate and interest rates which will impact on the choices that your customers will make, so it’s likely that the market will opt for a ‘wait and see’ approach before any major commitments are made. As an early counter-measure to this low buyer confidence, lenders have already begun to offer lower rates which has ensured the year has at least started off moving in a promising direction.

Closeup house model over the Sale representative offer the house price list and condition for purchase or rental on the working space table in new place,Moving and House Hunting concept

Halifax recently shared their predictions for house prices and Vikki Jefferies, Proposition Director offers her thoughts on the subject:

“Most of the market is still estimating a small drop in HPI year on year. During 2023 we saw a re-correction of house prices back to pre-pandemic levels, and there is likely more of this to flow into 2024.

In order to stimulate the housing market a combination of affordable housing, affordable mortgage rates and confidence in the market is required. There is undoubtedly pent up demand from those customers awaiting news on a stable base rate and more certainty of pricing. The political landscape is also interesting with much anticipation that the spring budget may deliver a much-needed boost for the market.

No matter what happens in purchase, there still remains a substantial opportunity for brokers to secure remortgage and product transfer business in 2024, with currently just circa 68% of PTs being actioned via brokers.”

Toni Smith, Chief Distribution Officer, has also shared her predications:

“2024 will bring the prospect of “more remortgaging and product transfers, with still over a million borrowers set to move from rates around 2 per cent up to rates closer to 5 per cent.

She also outlined her thoughts on the cost-of-living crisis and how the demographics of our home-owning society can shape this:

“Our ageing population have, in many instances, paid off their mortgages, and a shortage of the right kind of housing means that supply pressure will continue. First time buyers need help as there is not enough housing to go round or enough levers to make people want to sell if they do not really need to. What the older generations do with that hard earned equity is important. Deposit outflows will be watched carefully if they are used to pay down mortgage balances as we may see both savings and lending markets shrink if they are.”

Whatever happens this year, we want to help our brokers face opportunities and challenges with confidence.

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