Here's what you need to know about house prices if you're thinking of buying or selling in 2024
House prices rise 1.5% annually in June, according to Nationwide(Image credit: Getty Images)
House prices experienced an increase of 1.5% in June compared to the previous year, according to Nationwide.
The average house price rose to £266,604, up from £264,249 in May with Northern Ireland led regional performance with a 4.1% rise in Q2, while East Anglia lagged with a 1.8% annual decline.
'How much is my house worth' may be crossing your mind at the moment – here's what you need to know about house prices in the UK.
House prices still held back by high mortgage rates
House prices increased monthly by 0.2% in June and 1.5% annually although prices remain approximately 3% below the peak reached in the summer of 2022.
Nationwide's Chief Economist, Robert Gardner, commented: “Housing market activity has been broadly flat over the last year, with the total number of transactions down by around 15% compared with 2019 levels.
"Transactions involving a mortgage are down even more (nearly 25%), reflecting the impact of higher borrowing costs. By contrast, the volume of cash transactions is actually around 5% above pre-pandemic levels."
However, he explains how higher mortgages are still holding back activity as interest rates on five-year fixed mortgages have risen from 1.3% in late 2021 to around 4.7% recently.
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Therefore, a typical first-time buyer now spends about 37% of their take-home pay on mortgage payments, compared to the long-term average of 30%.
Robert Gardner
Robert Gardner serves as the Chief Economist at Nationwide, where he heads a team dedicated to offering economic analysis and guidance, with a specific focus on the UK economy and a strong emphasis on monitoring the housing market and house prices.
They base this on the Consumer Prices Index (CPI), the key measure of inflation, which fell to 2% in May, its lowest rate in nearly three years and due to potential stamp duty cut.
As interest rates, which influence mortgage rates, are set based on the Bank of England's base rate, a decrease is anticipated. Deputy Governor Ben Broadbent hinted that a rate cut "could be on the horizon this summer".
Experts predict that rates could drop to 4.5% by year-end. John Bryson, Professor at Birmingham Business School, noted that the decision to maintain the bank rate at 5.25% was not influenced by the general election, emphasising the Bank's apolitical stance.
John Bryson
Professor John Bryson holds the Chair in Enterprise and Economic Geography at Birmingham Business School. His research is driven by a commitment to elucidating the intricate organisation of production across different spatial contexts and locations, employing a diverse range of enterprise models.
Nearly half of first-time buyers have delayed plans due to high prices
Research by Nationwide found nearly half (49%) of prospective first-time buyers have delayed their plans with 53% saying high house prices are the reason.
However, 41% said higher mortgage costs prevented them from buying and 84% said the cost of living crisis had affected their plans to buy.
Robert Gardner noted from the findings: “Interestingly, 55% of respondents said they would be willing to buy in another part of the country where house prices are cheaper, or where they could buy a bigger property. Inevitably, there is a lot of variation in how far people would be willing to move, but half said they would move more than 30 miles from their current location.
“Buying a property in a less expensive area appears to be the most common compromise that prospective buyers will make. Around a third (32%) said they would consider a smaller property than they wanted, while 28% would go for a property that needed work doing."
The results from the survey show the main reasons for first-time buyers delaying the purchase of their first home(Image credit: Nationwide)
While house prices show a consistent year-on-year increase the longer-term view reveals that house prices could be starting to stabilise.
Amanda Bryden, Head of Mortgages at Halifax, stated: “A period of relative stability in both house prices and interest rates should give a degree of confidence to both buyers and sellers.
"While homebuyers and those remortgaging will continue to respond to changes in borrowing costs, set against a backdrop of a limited supply of available properties, the market is unlikely to see huge fluctuations in the near term.”
Amanda Bryden
Amanda has established herself as a notable advocate within the intermediary market, amassing over 26 years of experience in the mortgage industry. Her journey in the sector commenced as a mortgage broker, after which she assumed diverse senior positions within several prominent mortgage lenders nationwide.
House prices could affect those looking to buy and sell in 2024(Image credit: Getty Images)
What does this mean for mortgages?
The current state of the mortgage market has created an atmosphere of uncertainty among potential homebuyers.
Mortgage rate rises have continued despite the Bank of England's (BoE) decision to keep the base rate at 5.25% in December. This meant the average five-year fixed mortgage rate is now 5.67%, down from its peak of 6.11% in July 2023.
Matt Smith, Rightmove’s mortgage expert, said: "After a few weeks of mortgage rate increases, we've seen early signs that this current run of rate increases has peaked and we'd expect that average mortgage rates will begin to trickle down again soon.
"The market is still assuming that the first Base Rate cut will happen in the Summer, and today's decision is unlikely to change that view. All eyes now turn to the publication of April's inflation data, which is the next key milestone and is likely to determine the immediate direction of mortgage rates in the UK."
News Editor Joseph has previously written for Today’s Media and Chambers & Partners, focusing on news for conveyancers and industry professionals. Joseph has just started his own self build project, building his own home on his family’s farm with planning permission for a timber frame, three-bedroom house in a one-acre field. The foundation work has already begun and he hopes to have the home built in the next year. Prior to this he renovated his family's home as well as doing several DIY projects, including installing a shower, building sheds, and livestock fences and shelters for the farm’s animals. Outside of homebuilding, Joseph loves rugby and has written for Rugby World, the world’s largest rugby magazine.
