Here's what you need to know about house prices if you're thinking of buying or selling in 2024
House prices rose 0.3% in March, according to Halifax(Image credit: Getty Images)
House prices are up annually in March by a modest 0.3%, according to the latest Halifax House Price Index (HPI).
The rise means the average home now costs £288,430, although this is around £2,900 less than last month as increases begin to plateau.
Prices are set to be tied to continuing affordability issues and the base rate with many potential buyers struggling to afford increasing mortgage rates.
'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 price rises continue, although increase is declining
House prices in March experienced a modest annual growth of 0.3%, according to the latest Halifax HPI.
Although down on February's 1.6% increase house prices are still 2% up on Q4 2023. This follows Nationwide's March HPI that also showed house prices rose by 1.6% annually.
Kim Kinnaird, Director, Halifax Mortgages, said: "House prices have shown surprising resilience in the face of significantly higher borrowing costs.
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“The broader picture is that house prices are up year-on-year, reflecting the opposing forces of an easing cost of living squeeze – now that pay growth is outpacing general inflation – and relatively high interest rates."
Kim Kinnaird
Kim Kinnaird holds the position of Banking and Trade Delivery Director within the Commercial Bank at Lloyd Banking Group. In her role she oversees the service teams responsible for managing the daily banking requirements of Commercial Banking clients, with a primary focus on cash management, payments, and comprehensive servicing of trade products for the Group's business clients.
Affordability and base rate to determine future of the housing market
The future of house prices will be determined by affordability and future Bank of England base rate changes, according to industry experts.
The base rate was increased in 2023, and still stands at 5.25%, which has reduced affordability options for potential homebuyers as it has meant mortgage options were not only set at high levels but were reduced.
Kim Kinnaird said: “Affordability constraints continue to be a challenge for prospective buyers, while existing homeowners on cheaper fixed-term deals are yet to feel the full effect of higher interest rates. This means the housing market is still to fully adjust, with sellers likely to be pricing their properties accordingly.
“Financial markets have also become less optimistic about the degree and timing of Base Rate cuts, as core inflation proves stickier than generally expected. This has stalled the decline in mortgage rates that had helped to drive market activity around the turn of the year."
Robert Gardner, Nationwide's Chief Economist, added: “Activity has picked up from the weak levels prevailing towards the end of 2023 but remain relatively subdued by historic standards.
"For example, the number of mortgages approved for house purchase in January was around 15% below pre-pandemic levels. This largely reflects the impact of higher interest rates on affordability."
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.
While house prices show a consistent year-on-year increase the longer-term view reveals that house prices could be starting to stabilise.
Kim Kinnaird stated: “The broader picture is that house prices are up year-on-year, reflecting the opposing forces of an easing cost of living squeeze – now that pay growth is outpacing general inflation – and relatively high interest rates. Taking a slightly longer-term view, prices haven’t changed much over the past couple of years, moving in a narrow range since the spring of 2022, and are still almost £50,000 above pre-pandemic levels.
“Looking ahead, that trend is likely to continue. Underlying demand is positive, as greater numbers of people buy homes, demonstrated by recent rises in mortgage approvals across the industry and underpinned by a strong labour market. And with rental costs rising at record rates, home ownership continues to be an attractive option for those who can make the sums work.
“However the housing market remains sensitive to the scale and pace of interest rate changes, and with only a modest improvement in affordability on the horizon, this will likely limit the scope for significant house price increases this year.”
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.
Kim Kinnaird stated: “Even with growing wages and inflation falling back, raising a deposit and affording a sizeable mortgage remains challenging, especially for those looking to join the property ladder, so it remains a possibility that there could be a slowdown in the housing market this year.”
What does this mean for those wanting to sell?
Buyers are active, particularly when the right property at the right price becomes available, but agents advise sellers to capture buyer attention by setting a competitive price from the outset, according to Rightmove analysis.
According to Rightmove's analysis, commencing with a higher price and later reducing it significantly diminishes the chances of a successful sale. However, many sellers are struggling to adapt their pricing strategies in this more challenging market.
Tim Bannister Rightmove's, Director of Property Science, said: "Despite these positive activity numbers, the market appears to be operating at two speeds. Some agents report that properties that are accurately and competitively priced are being snapped up by budget-conscious buyers who are keen to make 2024 their year to move, having paused during the uncertainty of 2023.
"However, properties that are over-priced will immediately stand out against more competitively priced neighbours and are being left on the shelf by price-sensitive buyers. Evidence of this is that despite higher activity levels than last year, it’s now taking an average seller more than two weeks (16 days) longer to successfully find a buyer than at the same time last year.
"The time to find a buyer is at its slowest since 2015, excluding the initial lockdown months of April and May 2020. Buyers now have more time to consider which property is right for them, making it even more important for sellers to price temptingly and stand out from the crowd."
Tim Bannister
Tim Bannister joined Rightmove in 2010, initially working in our lettings division before transitioning his focus to insights. As the current Director of Property Science, Tim leverages data, technology, and analytics to create distinctive insights that inform and guide property-related decision-making processes.
I’m buying/selling a house, what do I need to know?
The recent slowdown in consumer price inflation was not as significant as anticipated, leading to increased expectations for future Bank Rate decreases, according to Nationwide.
Robert Gardner advised: "Those looking to secure a new home for the new year should apply for a Mortgage in Principle to work out what they could afford, and listen to local estate agents about what's happening in their local housing market."
Despite recent fixed mortgage rate increases many potential buyers could find affordable housing options, especially with larger upfront deposits.
However, first-time buyers could find a welcome government announcement soon with the government proposing a 1% deposit limit for those buying their first house in an effort to get people onto the property ladder.
As well as this first-time buyers do not have to pay stamp duty for homes worth up to £425,000 whilst the stamp duty cut in September 2022 meant the threshold for stamp duty exemption in England and Northern Ireland was lifted for homes worth up to £250,000 for all other buyers.
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.
