In the ever-evolving world of real estate, keeping an eye on upcoming trends is pivotal for individuals and businesses across the construction sector. With this in mind, there’s one question at the forefront of everyone’s minds; ‘what’s the forecast for housing sales?’ This year is expected to bring about some significant changes in the housing market, particularly in the UK.
As we explore this topic further, we’ll discuss the current state of the market, the growth instability of interest rates, and the shift in house prices to more competitive levels.
The Current State of the Housing Market
Before we establish whether housing prices will fall or rise in 2024, it’s essential to establish where the sector is and where it has been for the last 12 months.
What Happened in 2023?
Since January 2023, the housing market experienced a multitude of changes. Approximately one million homes were sold across the UK, partly spurred on by house prices dropping by 1.2%. This reduction was more pronounced across the south of England, but by the end of the year, it had spread across all regions and price bands.
As mentioned in the study above, the Bank of England raised the bank rate five times in 2023. These increases significantly impacted buying power, reducing budgets by an estimated 20% due to higher mortgage costs. Despite these challenges, the most popular types of properties sold were terraced houses, followed by semi-detached properties, apartments and flats, and detached homes.
What is the 2024 Forecast for Housing Sales?
It’s clear that 2023 was a mixed year for the housing sector. But, with stabilising interest rates and competition in house prices, 2024 could be a year for modest but solid improvement.
The prediction for housing sales in 2024 is set to navigate through a second consecutive year of decreasing house prices. Experts predict that property values will experience a reduction of up to 4% from the previous year. This downward trend in house prices could open up promising new opportunities for prospective buyers, particularly those looking to make their first foray into homeownership.
As the year progresses, the housing market is anticipated to regain its footing, with the house price decline expected to stabilise during the latter half of the year. This recovery is primarily attributed to the strategic efforts of the Bank of England, which is set to embark on a cycle of reversing its prior rate increases. This move will result in lower borrowing costs, making mortgages more affordable for a larger demographic.
The reduction in borrowing costs is not only expected to ease the financial burden on existing homeowners but also stimulate activity in the housing market by attracting new buyers. The lower house prices, coupled with decreased costs of borrowing, could well create an ideal environment for first-time buyers and investors.
Optimism in the Market
Robert Gardner, the Chief Economist at Nationwide, acknowledges potential hurdles but emphasises a resurgence of optimism within the market. He cites several compelling reasons for the positive shift:
Growth Outpacing Inflation: This trend signals a healthier economy, where real income increases and the purchasing power of consumers is not eroded by rising prices. As a result, the current squeeze on incomes, which has been a cause of concern for many prospective homeowners, is expected to ease substantially.
Reduction in Mortgage Rates: This represents another vital element contributing to an improved landscape. Lower mortgage rates significantly enhance the affordability of homes, making homeownership a more attainable goal for a wider demographic group. As mentioned above, this will especially benefit those who have previously been priced out of the housing market.
Gardner also cautions, however, that patience is required. The full impact of lower mortgage rates may not be immediately apparent. It may take some time for this effect to permeate through the market as it depends on various factors such as lenders’ policies, borrowers’ financial situations, and overall economic conditions.
A Desire to Move
A recent poll revealed that 15% of Brits are considering moving house in 2024, buoyed by the incentives we discussed above. Of those eyeing a move, 27% feel more optimistic about the housing market after years of uncertainty. Furthermore, 20% of potential buyers are planning to move within the next year, with 44% of the total respondents open to purchasing a new build property.
However, 61% of respondents felt overwhelmed by the jargon associated with the home buying process, displaying a need for sellers and mortgage lenders to provide clarity and transparency for prospective buyers.
Ready to Make the Most of Our Prediction for Housing Sales in 2024?
At ITS, we like to stay ahead of the curve to bring you the latest updates and trends on the UK housing market. Whether you’re part of a building or development organisation or a candidate looking to build a career in construction, it’s crucial to us that you’re given the best possible information to make educated decisions.
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