Homeowners and would-be buyers will be glad to see the back of 2023. Mortgage rates began to fall but rose once again over the summer. Gradual house price falls were recorded soon after as movers were priced out of the market due to higher borrowing costs. Predictions of 10% declines throughout 2023 and a question mark over how high-interest rates would climb caused many homeowners to cancel any plans to move home last year.
So is 2024 a better time to up sticks, sell your house and move to a new home?
House prices – the reality
Experts agree that we’re unlikely to see significant price drops in 2024. Nationwide and Zoopla predict a fall of no more than 2% while Halifax says prices could fall by up to 4%.
If you’re already a homeowner and are hesitant about moving house because you don’t want to lose equity, keep in mind that house prices rose 26% between the beginning of 2020 and the end of 2022 for an average detached home so you’ve already made a significant gain. You’ll also benefit from a reduction in the price of your onward purchase.
Paula Higgins, chief executive of consumer group HomeOwners Alliance, said: 'I wouldn’t assume there will be house price falls this year.
'I’d be concerned for anyone who is living in a home that’s not right for them waiting for a big house price crash. Our advice is always to keep calm and do what’s best for your circumstances.'
Will interest rates fall in 2024?
The Bank of England has stopped increasing the base rate which influences other rates such as your mortgage. It currently sits at 5.25% and those who work in the financial markets believe it will not go any higher.
Will the Bank of England begin cutting the base rate this year? That depends on the direction of inflation. Currently, the pace at which the price of goods and services are rising is 3.9% a year.
The Bank of England’s target for inflation is 2%. Keeping interest rates high stops households from spending lots of money, which should stop prices from rising. If inflation falls back to 2%, the Bank could reduce the base rate this year.
Those who work in the financial markets are speculating we’ll see interest rate cuts this year but some members of the committee who make the decision have said rates must remain high throughout 2024.
Despite this, big named mortgage lenders such as HSBC, Nationwide, Barclays and Halifax have recently made cuts to their mortgage rates which will reduce the impact on movers’ household budgets.
Richard Donnell, executive director at Zoopla, said: 'We expect more buyers to return to the market in 2024 encouraged by mortgage rates falling back towards 4.5% and even lower should base rates start to fall.'
Mortgage broker Nicholas Mendes of John Charcol said: 'Mortgage rates are now reducing quicker than anticipated as lenders try to tap into pent-up demand to buy or move home.
'However, if you wait for rates to fall further the property you desire may no longer be on the market.
'If the property fits your needs now and in the future and remains affordable, now is the right time to buy.'
Home moving opportunities in 2024
There are fewer buyers in the market and more homes available to buy, compared to 2019, according to Zoopla which puts the purchaser in a strong position to haggle down the price. Towards the end of 2023, sellers were accepting average discounts of £18,000 or 5.5%.
There are also opportunities for first-time buyers. Some landlords are exiting the market due to high interest rates and less tax breaks which means more starter homes will be available to buy.
There may also be support for first-time buyers announced in the budget. Paula Higgins added: 'We’re hoping for some changes to stamp duty in the March Budget. But if I was a first-time buyer I wouldn’t necessarily wait for that because it will create more competition for homes.'
However, it is an election year which often causes people to wait and see how the winning party’s policies will affect their finances.
Richard Donnell said: 'Market activity tends to slow before general elections as people wait until the outlook becomes clearer. That said, the two main political parties have similar priorities and there may be less disruption to market activity than in previous elections.'
Mortgage affordability will remain challenging for lots of homeowners and will hold back some movers who are reluctant to let go of a low fixed rate.
Zoopla says a key trend in 2024 will be homeowners moving further afield to find cheaper houses.
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Samantha Partington is a personal finance journalist specialising in mortgages and the property market.
Over the past nine years, Samantha has worked for the Daily Mail, trade website Mortgage Solutions and business title Property Week. She regularly writes for national money pages including Money Mail and Sun Money and supports prop tech firms with content writing.
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