Understanding the details of the conveyancing process will help you make informed decisions about your property transactions.
Read on to learn about the current year's trends and predictions for the future.
UK house price trends in 2024
In 2024, the UK housing market saw modest decreases in house prices. These trends currently reflect a response to a combination of high mortgage rates and sustained affordability pressures. This forecast is pertinent for those considering property investments or transactions this year or the next.
Slow market recovery trend
Despite the downward trend, certain areas, notably the Northeast, exhibited resilience, hinting at a slow but steady market recovery.
Read our detailed article about buying a house in the UK.
Mortgage buyers gradually return: a shift in the market dynamics
As we progress into the third quarter of 2024, we continue to anticipate a gradual return of mortgage buyers. This shift is based on the easing of affordability pressures and adjustments in mortgage lending practices.
The average house prices seem to be stabilising due to this increased activity, offering a more balanced market for both buyers and sellers. This information is particularly relevant for prospective buyers and estate agents monitoring the pulse of the market.
Have a look at the numerous types of mortgages available, to see what suits you best.
Cash buyers remain active: a constant in the changing market
Cash buyers, less impacted by fluctuating mortgage rates, are expected to maintain a consistent presence in the property market. Their ongoing activities could provide a stabilising effect on house prices, especially in sought-after locations.
This aspect is relevant for sellers and buyers alike, offering insight into a market dynamic that could influence decision-making.
Continued affordability pressures
The prevailing high borrowing costs and ongoing affordability issues are likely to constrain house price growth in 2024 and 2025. This scenario underscores the need for buyers and sellers to remain vigilant and adaptable to the changing economic landscape.
Awareness of these pressures is important for anyone involved in the property market, as they impact buying power and market accessibility.
The role of commercial relationships
The evolving relationship between estate agents, property websites, and mortgage lenders will play a notable role in shaping market dynamics.
These changes could affect property transactions and asking prices, offering a new dimension to how the market operates. This aspect is particularly relevant for those within the real estate industry, including agents and property developers.
Learn about buying and selling at online property auctions.
North East's position: a regional market analysis
The North East stands out as a region experiencing different trends compared to the national average. Factors specific to this area, such as local economic growth and housing supply dynamics have led to steadier house price growth.
This regional analysis is relevant for investors and homebuyers focusing on this area, offering tailored insights into its market conditions.
The North East's housing market benefits from a lower average property price, making it an attractive option for first-time buyers and investors.
Recent changes in average UK house prices
Recent shifts in average UK house prices reflect a dynamic property market. The Land Registry shows fluctuating average prices. The past year has seen a blend of rising and stabilising prices across various regions.
The impact of further modest house price falls
Modest house price falls, as forecasted by residential research experts, could impact the market. Factors like higher mortgage rates and economic uncertainties contribute to these trends. These falls influence home movers' decisions and buyer confidence, subtly reshaping the property landscape.
How local economic factors influence property prices
Local economic factors play a big role: in regions with robust economic growth, such as job creation and income increases, house prices tend to rise.
Conversely, areas experiencing economic downturns or lower wage growth often see stagnation or declines in property prices. This correlation is evident in UK regions, where local economic health directly impacts housing market dynamics.
Mortgage rates and their influence on house prices
Trends in average mortgage rates
Interest rates shape mortgage payments. In the UK, these rates have seen fluctuations, impacting average house prices.
The relationship is direct: higher rates often dampen house prices, while lower rates can buoy them. The Bank of England's decisions directly influence these rates. Recent trends suggest a gradual increase.
This change affects buying power, leading to a subdued demand in the housing market. For you, this means closely watching the Bank of England's announcements, as they could directly impact your mortgage affordability.
Learn how to draft a successful mortgage application.
How mortgage markets are reacting to economic shifts
Economic shifts steer the mortgage market's direction. Lenders adjust their offerings based on wider economic conditions, including inflation and economic growth. The current climate sees lenders becoming more cautious.
This caution emerges from the economic uncertainty pervading the UK. For you, it translates to stricter lending criteria and a need for better financial standing to secure favourable mortgage terms.
Estate agent Henry Pryor suggests this might lead to a reduction in average house prices as sellers adjust to a smaller pool of qualified buyers.
Changing trends and expectations
Shifts in buyer demand and confidence
Recent trends show a shift in buyer demand and confidence in the UK housing market. Buyers are increasingly cautious, factoring in economic uncertainties. This trend leads to a more measured approach to property investments.
Estate agents report changes in buyer priorities, with a focus on long-term value and sustainability. This shift affects asking prices and overall market dynamics.
How first-time buyers are adjusting to the market
First-time buyers face unique challenges, often dealing with affordability pressures and limited availability. However, as these pressures slowly ease, new opportunities arise.
First-time buyers are adapting by seeking properties in emerging areas and considering different property types. Estate agents play a role in guiding these buyers through the evolving market landscape.
Have a look at the first-time buyer schemes designed to help ease their path to homeownership.
Will house prices fall in 2025?
In 2025, several indicators suggest a decrease in house prices. The Bank of England's monetary policy, particularly interest rates, plays a role. High interest rates can lead to increased mortgage costs, causing a decline in demand for housing.
Additionally, the economic environment, marked by ongoing affordability pressures, influences consumer confidence and buying power.
The average UK house price reflects these broader economic conditions. If these pressures persist, house prices might experience a downward adjustment.
Expert opinions on the likelihood of price drops
Views among experts vary regarding the likelihood of house prices falling in 2025. Some analysts, referencing data from the Nationwide Building Society and property websites, anticipate a gradual reduction in prices due to continued affordability pressures.
Other experts, considering factors such as average property prices and the average time properties spend on the market, suggest a more stable outlook. Some even suggest an eventual rise in the last quarter of 2024 continuing into 2025.
Hence, the opinions are varied and there is no one point of view upon which experts agree.
Estate agents, having a commercial relationship with the market, often provide insights based on real-time demand and supply dynamics. Their perspectives, combined with forecasts from economic think tanks, offer a comprehensive view of the possible trends in house prices.
Effects of the living crisis on property markets
The living crisis, marked by increasing living costs, impacts property markets. Higher costs reduce disposable income, directly affecting affordability and buyer sentiment.
The crisis also influences investor confidence, as disposable income impacts rent affordability. These shifts often result in a gradual reduction in average house prices, reflecting the broader economic challenges.
Overall, the market now seems stable compared to last year. The maximum house prices falls are now behind us. But we recommend that you keep a close eye on the trends before making decisions.