House prices stalled in recent months on the back of high mortgage rates and political uncertainty ahead of the general election.
Property prices fell by 0.2 per cent month-on-month in June, according to Halifax’s index earlier this month, although they are up 1.6 per cent when compared to a year ago.
But what are the latest predictions for what could happen in the rest of 2024?
Below, i summarises what experts have said on the future of property prices this year.
Aneisha Beveridge, head of research at Hamptons estate agency, which previously forecast that prices at the end of 2024 would be at the same level as the end of 2023, says that “receding political and economic risks” could create capacity for “a bit more house price growth this year.” This suggests house price growth could be positive throughout the rest of the year.
However, this could vary dramatically from region to region with the forecast suggesting rises of 2 per cent in East of England and falls of 1.5 per cent in the North West, for example.
“Mortgage rates have fallen quicker than we anticipated, while income growth has stayed high, improving the affordability picture for buyers. However, prices in the south, where homes are more unaffordable, continue to lag behind the rest of the country. This may begin to switch towards the end of the year,” she says.
“A new government often gets a honeymoon period when simply being different from the last government is enough to spark renewed confidence. We expect this feel-good factor to extend into the housing market, with more activity taking place in the second half of the year. Overall, we expect transaction numbers in 2024 to rise 10 per cent compared to last year, with more moves taking place in 2025″, she adds.
Neal Hudson, housing market analyst, said much depends on what happens to inflation and interest rates in the next few months.
“Much depends on where interest rates go from here and, with inflation now below the Bank’s two per cent target, we could see interest rates fall sharply. If that feeds through to mortgage rates and we end up with products available below four per cent then we could even see higher house price growth in a low turnover market.
“Conversely, if these high rates do affect the economy and unemployment starts to rise significantly then price falls might be outcome. It’s all very uncertain right now.”
Sam Miley, forecasting lead at the Centre for Economics and Business Research, expects house prices to fall slightly by the end of 2024, compared to 2023.
“Our view is significantly less pessimistic than was the case at the start of the year, when our forecast was for house prices to contract by 2.4 per cent in 2024, relative to 2023. Though we are still projecting a contraction, this is now much smaller in magnitude,” he adds.
Oliver Knight, partner in the research team at Knight Frank estate agency, which expects house prices to be up 3 per cent at the end of 2024 compared to the end of 2023, says growth in prices in the second half of 2024 could “outstrip” growth in the first half.
“The reasons are we expect to see further falls in the cost of mortgages. Perhaps this is not as much as at the turn of the year, but we’ll see more buyers return to the market,” he says.
“That needs to be put in context compared to previous years – in real terms it’s still only very slight growth,” he adds.
“Other key factors are GDP growth and wage growth, if those are higher than expected, that can support affordability which could push up prices, and on the downside, they could also be a risk.
“In terms of policy, I don’t think that will have a huge impact on pricing this year, but if you started to see policies that stimulate demand, that could push up prices.”
Richard Donnell, executive director at Zoopla, which is forecasting a 1.5 per cent rise in house prices across 2024, says the projection is up on a 2 per cent fall predicted at the end of 2023.
“Transactions will be 1.1m, 10 per cent higher than 2023,” he says, but there are risks to the upside and downside.
“On the upside is the timing of the first base rate cut which will deliver a sentiment boost to the market rather than an immediate feed through into mortgage rates. There are plenty of homes for sale but we need continued encouragement for people to make decisions to buy and affordability and mortgage costs are key elements.
“On the downside it’s the economy and the trajectory for base rates and how this feeds into mortgage rates. Home buyers shouldn’t expect mortgage rates to fall back to their recent lows and 4-4.5 per cent is likely to be the new normal. We believe that house price growth will remain in low single digits as house prices and incomes need to re-align across southern England”, he adds.