The current UK property market shows mixed trends as we head into the latter part of 2024, influenced by changes in mortgage rates and economic conditions.
House Prices: House prices have seen some fluctuation recently. According to the latest data, house prices increased by 2.2% annually in July 2024, although this was a slower growth rate compared to June. Meanwhile, Rightmove data indicates that average asking prices increased by 0.8% in September, marking a larger rise than is typical for this time of year. The average UK asking price now stands at approximately £370,759, driven partly by a recent interest rate cut that boosted market confidence (source: MoneyWeek).
Market Sentiment and Predictions: Many analysts and agencies are cautiously optimistic about the housing market for the remainder of 2024 and into 2025. Savills, for example, has revised its forecast, predicting a 2.5% increase in property values for 2024, following more positive economic signals such as the reduction in mortgage rates. Fine & Country has also predicted an uptick in activity during the autumn, partly due to an increase in housing supply—now at a seven-year high—which has helped to balance affordability (source: MoneyWeek).
Mortgage Market: The Bank of England recently cut the base rate from 5.25% to 5%, which could drive further reductions in mortgage rates, possibly below 4.5% for some deals. This has encouraged an increase in buyer activity, although rates remain relatively high by recent historical standards. Current average two-year fixed rates hover around 5.4%, which is impacting affordability for many potential buyers, especially first-time buyers (source: Times Money Mentor).
Outlook for 2024: Predictions for the market vary. Rightmove has adjusted its expectations from a slight fall to a modest 1% increase in house prices over the year, while Savills and Knight Frank are more bullish, expecting price rises of up to 3%. Conversely, Lloyds Bank expects a further 2.4% decrease in prices for 2024 before seeing some recovery in 2025 (source: Times Money Mentor).
Broader Economic Impact: The cost of living crisis and rising interest rates have put pressure on household budgets, although falling inflation and wage growth are providing some relief. This economic backdrop is crucial, as consumer confidence and the cost of borrowing significantly influence housing market trends. Despite elevated mortgage rates, demand still appears to outstrip supply in many regions, preventing a sharp downturn in house prices for now.
Overall, while the UK property market remains in a state of flux, optimism has grown due to falling mortgage rates and an improving economic environment. However, high borrowing costs and affordability issues mean that house price growth will likely be modest, with further developments depending largely on economic factors and potential further rate cuts by the Bank of England.
