(Dec 29): UK house prices may weaken further in 2024 after a 1.8% drop this year, one of the country’s biggest mortgage lenders predicted.
Nationwide Building Society said the average cost of a home is now £257,443 (US$328,650 or RM1.51 million), which is 4.5% below its peak in summer 2022. It anticipates prices to stagnate or fall as much as 2% next year, slightly less severely than the 2% to 4% drop expected by its main rival Halifax.
The outlook indicates resilience in the property market, which economists a year ago anticipated would drop by 10% or more this year. A shortage of places for sale helped prop up prices, which were unchanged in December after strengthening in the previous three months.
“A rapid rebound in activity or house prices in 2024 appears unlikely,” Nationwide chief economist Robert Gardner said in a statement on Friday. “Consumer confidence remains weak, and surveyors continue to report subdued levels of new buyer enquiries.”
Estate agents are seeing some evidence that the market is stabilising and may even strengthen. That reflects a drop in market interest rates that guide the cost of mortgages.
Nationwide said housing purchases backed by mortgages are running about 20% below pre-pandemic levels, but there have been more buyers who can afford to pay in cash.
“With mortgage rates falling, it is increasingly likely that house prices avoid falls altogether next year,” said Andrew Wishart, a senior property economist at Capital Economics.
The Bank of England has raised interest rates sharply to the highest level since 2008, which curtailed activity in the property market. But expectations the central bank will cut rates next year have eased mortgage costs in recent months and returned confidence to some buyers, estate agents say.
“December is usually quiet, but the first three weeks of this month saw buyers emerging left, right and center,” said Stephen Perkins, the managing director of Norwich-based Yellow Brick Mortgages. “Demand was much higher than usual, and did not drop off as early for the festivities as in previous years. As ever, there are far too few properties available for the growing swell of interested buyers to purchase.”
Other reports indicated reasons for caution about the strength of the housing market.
UK consumers are increasingly worried about their financial security and holding tighter to their purse-strings heading into 2024, reviving concerns that the economy could tip into a recession. A survey by KPMG UK showed 41% of consumers say they are feeling less financially secure than at the end of 2022.
Separate data from Barclaycard showed card spending increased just 4.1% over 2023 despite ever-rising prices, less than half the 10.6% gain a year ago and near the rate of inflation. The figures indicate households have cut back on clothing, eating out and home improvements.
Over 2023, Northern Ireland and Scotland were the only two regions where house prices grew, at 4.5% for Northern Ireland and 0.5% for Scotland, Nationwide said. East Anglia was the weakest region, with prices down 5.2% on a year ago. London was the best-performing southern region, with a decline of 2.4%.
Some estate agents were optimistic about the year ahead. Emma Jones, the managing director at Frodsham-based mortgage broker When the Bank Says No, said it was “no ordinary December” with the market “definitely starting to improve”.
And Mike Staton, a director of Mansfield-based broker Staton Mortgages, said the first three weeks of December “were the busiest run-up to Christmas we have had on record”.
