In the wake of a record-low number of first-time buyers in 2023, the UK housing market is poised for stabilisation in 2024. In this unpredictable economic climate, experts cautiously predict trends for the upcoming year.

House Prices in 2024

Despite recent increases, there is optimism for prospective buyers in the new year. Forecasts suggest a potential 2% decline in house prices by the year-end, with estimates from Halifax reaching up to 4%. Ongoing inflation and high-interest rates are identified as primary contributors to reduced affordability, prompting lower asking prices. The looming General Election in 2024 is expected to further slowdown the housing market, as uncertainty leads sellers to reconsider their pricing strategies.

Mortgage Rates in 2024

The landscape of mortgage rates remains uncertain as we enter 2024. While the Bank of England has yet to announce an interest rate cut, predictions of such a decision have prompted some lenders to proactively lower mortgage rates. Anticipating potential rate drops in late 2024, buyers could experience more favourable conditions in 2025. Affordability, however, remains a pressing concern for first-time buyers throughout 2024, emphasising the importance of wage increases.

One positive development is the significant increase in available mortgage products, reaching the highest level in the past 15 years. Notably, 5% deposit mortgage deals rose by 6% from December 2023 to January 2024, providing a broader range of options for potential homebuyers.

Renting Costs in 2024

Contrary to past trends, rent prices continue to rise, increasing by 6.2% in the last 12 months as of November 2023. Unfortunately, this upward trajectory is projected to persist throughout 2024, with some experts anticipating a 6% increase in rental costs. This poses a challenge for renters, as the lack of affordability makes saving for a deposit difficult or, in some cases, impossible.

Implications for Prospective First-Time Buyers

Stricter stress-testing by banks, using higher mortgage rates than current ones, has raised the bar for prospective first-time buyers, resulting in a notable decline in this demographic in the open market. To address this challenge, exploring alternative paths to homeownership, such as Shared Ownership and Rent to Buy schemes, becomes crucial. Zoopla suggests that, in 2024, the second-largest group of buyers will be first-time buyers. Encouraging flexibility in location and utilisation of first-time buyer schemes may facilitate the realisation of homeownership dreams.

Despite uncertainties, strategic considerations in house prices, mortgage rates, renting costs, and alternative buying schemes can empower prospective buyers to make informed decisions in their pursuit of homeownership.

Eric Morse-Brown, Director at Trinity Property, commented ‘the positive news coming out makes a welcome change – we’re already seeing an increase in both properties coming on For Sale and buyers coming forward for viewings – and encouragingly, offers too!’