Britain’s housing market is past “peak pain”, and price s look likely to bottom out by next summer, according to the estate agency Savills. The average UK house price is projected to fall by 3% in 2024, after a 4% drop this year, the upmarket estate agent and property advisory firm said.
Prices held up slightly better than expected in 2023, as mortgage markets settled over spring and autumn , after the chaos unleashed by Liz Truss’s mini-budget just over a year ago. Property values are estimated to be down 7% since the autumn of last year to the end of 2023.
Savills expects the Bank of England to start cutting interest rates in the second half of 2024, reducing its base rate to 4.75% by the end of that year, from 5.25% now. The property company forecasts rates will fall to 1.75% in 2027.
The central bank has hinted that interest rates are likely to stay high for a prolonged period to tackle infl ation. Savills is forecasting a return to house price growth of 3.5% in 2025, with 5% in 2026, 6.5% in 2027 and slowing again to 5% in 2028.
The forecasts came as the mortgage lender Halifax said UK house prices rose last month in the face of a shortage of homes on the market after a run of six monthly falls . The average price rose to £281,974 in October, up by 1.1% from September, an increase of almost £3,000 and the first time prices have gone up since March.
Compared with October last year, prices fell by 3.2%, less than the annual decline of 4.5% in September.
Lucian Cook, Savills head of residential research, said: “ The first cut to rates still looks to be some way off . This means continued affordability pressures are likely to result in further modest house price falls over the first half of 2024, resulting in a peak to trough [fall] in the order of 10%.
“ We expect growth to accelerate as affordability pressures ease, with the strongest growth forecast for 2027 when rates reach their long-term neutral level. ” However, reflecting fewer deals with mortgaged buyers, in particular buy-to-let investors, overall property transactions are expected to end this year 20% down on 2022 at just over 1m, and stay at this level next year. The market is in the late stages of a typical cycle, Savills said.
That suggests slightly greater house prices falls in London and the south-east next year, and the strongest overall price growth in Wales and north-east England over the next five years, with London leading growth from 2028 . Prime central London properties (the top 5%-10%), are the only market segment projected to avoid falls in 2024.
Source: The Guardian