What could 2024 mean for UK property prices?

The start of a new year means new hopes and dreams for every individual. If 2024 is all about getting yourself onto the property ladder or selling your current property to upgrade or downsize, understanding the current state of the market is a must.

With the Bank of England’s base rate rising a whopping 14 times consecutively from December 2021 before reaching a 15-year high of 5.25% in August 2023, the last two years have been a turbulent time for the UK property market and homeowners. But, could things be looking up for 2024?

The base rate is stabilising

Whilst we’re on the subject of the Bank of England (BoE) base rate, analysts believe that the worst could indeed be over. Inflation is continuing to decrease which means the BoE base rate has remained unchanged, holding at 5.25% since reaching its 15-year high last summer.

The lack of further increase is a step in the right direction for the mortgage market. It’s predicted that the base rate will hold at 5.25% when it is reviewed again in March. This is set to have a positive impact on the property market and subsequent prices with confidence returning, increased competition amongst buyers, and sellers asking for more for their properties as a result.

Mortgage rates are falling

One of the key factors impacting the UK property market in 2024 is the state of mortgage rates. Mortgage rates after all play a key role in shaping the affordability and accessibility of property for would-be buyers.

Recent rate cuts have seen prices across many mortgage products tumble dramatically. But, how are lenders reducing their rates below 4.5% if the base rate is stable yet still at 5.25%? It all comes down to ‘swap rates’ as ContractorUK explains:

“Lenders have been securing finance for mortgages using ‘swap rates’. Swap rates are, in layman’s terms, prices at which future money is trading. For many months, swap rates have been below the BoE base rate, enabling lenders to offer the deals we’re seeing now. But, if recent predictions about inflation are on the money, the BoE will be forced to reduce its base rate sooner than they’d hoped.”

Mortgage rate cuts can however be a double-edged sword for buyers. Lower mortgage rates for instance may mean reduced borrowing costs and more affordable property ownership, which are great incentives for first-time buyers and existing homeowners adding to their portfolios. But enhanced affordability could contribute to increased demand to drive property prices upward, which is great for sellers but not so good for those looking to buy.

Buyer confidence is growing

With economic conditions more favourable, an increasing number of people are considering an investment in property. More buyer activity has seen sellers step up their games too, with a record Boxing Day property listings boost recently reported. How the increased activity will impact house prices nationwide is yet to be seen.

Prices remain dependent on local markets and property types. Smaller, more affordable properties for example are already in high demand, driving property prices in this arena up. Larger properties at the top end of buyer budgets however are being cut in value.

2024 – the right time to buy a property?

The answer to this very important question depends on your individual circumstances and goals. If you’re a first-time buyer, lower mortgage rates make now a great time to take that very big step onto the property ladder. Existing homeowners looking to upgrade or invest might also find the current conditions particularly favourable.

Whatever your circumstances, conducting thorough research, seeking professional guidance from independent advisors like us, and assessing your own financial stability are vital before pursuing a property purchase.