As we delve into the latter part of 2024, the UK housing market continues to display signs of resilience in the face of ongoing challenges. The slow but steady rebound from a sluggish start to the year reflects the market’s cautious pace of recovery. However, high mortgage rates persist, exerting pressure on both buyers and sellers, thereby dampening hopes of a significant price surge.
Current State of House Prices
Recent data from the Land Registry indicates a slight upward trend in house prices, with the average UK house price reaching £292,000 in September 2024, reflecting a 3.2% annual increase. This marks a notable improvement compared to the previous year, where prices saw almost no movement, rising just 0.01%.
Regional disparities remain prominent, with Northern Ireland leading the way, experiencing an impressive 6.7% annual increase, bringing the average house price to £190,000. Conversely, London saw a modest rise of 0.8%, with average prices standing at £528,000. Regions such as the East Midlands and South West witnessed slight declines, emphasising the disparate nature of the housing market recovery across the UK.
Insights from Major House Price Indices
Various house price indices provide unique insights into the market, offering a comprehensive understanding based on different data points such as asking prices and mortgage valuations.
Rightmove House Price Index: In September 2024, Rightmove, which offers the most up-to-date figures based on asking prices set by sellers, recorded a marginal 0.5% decrease in prices month-on-month, consistent with a modest yearly rise of 1.2%. Tim Bannister, Rightmove’s Director of Property Science, noted, “Sellers are continually adjusting prices to attract interest, maintaining the market’s resilience with a steady demand from buyers.”
Nationwide House Price Index: Nationwide’s index, based on mortgage lending, reported a 0.1% month-on-month increase in house prices for September 2024, contributing to a 2.9% year-on-year rise. Robert Gardner, Nationwide’s Chief Economist, highlighted that “even with the prevailing high mortgage rates, the slight annual price increase indicates robust demand, outperforming initial expectations.”
Halifax House Price Index: The Halifax index, also based on mortgage approvals, presented a 1.2% monthly increase in house prices for August 2024, with a 3.1% rise compared to the same period in 2023. Kim Kinnaird, Director of Halifax Mortgages, stated, “The housing market has sustained surprising resilience, with prices continuing to edge upwards in the face of economic headwinds. Nonetheless, affordability remains a significant concern for many potential buyers.”
Market Activity and Sales Trends
Despite the prevailing challenges, the housing market is displaying signs of increased activity. According to HMRC data, approximately 95,000 transactions were completed in September 2024, signifying an 8% increase compared to the same period in 2023. This uptick in sales suggests that the market is gradually regaining momentum, even as high borrowing costs persist.
However, selling a property is taking longer in this environment, with the average time to secure a buyer now standing at 65 days, up from 60 days in September 2023. The market remains highly price-sensitive, with approximately one in six homes on the market undergoing a price reduction of 5% or more to attract buyers. Homes without price cuts typically sell within 30 days, while those with reductions may linger on the market for up to 80 days.
Looking Ahead: What to Expect for the Rest of 2024
Amidst initial predictions of a challenging year for house prices in 2024 due to economic uncertainty and high interest rates, recent forecasts have become more optimistic. Savills, for instance, has revised its forecast from a 3% decline to a 2.8% rise in house prices by the end of the year. Similarly, Knight Frank expects a 3.5% increase across the UK, with a 2.3% rise specifically in Greater London.
Zoopla also shares a cautiously optimistic outlook, with its latest report predicting a 3% rise in house prices for 2024. Richard Donnell, Zoopla’s Executive Director of Research, remarked, “The easing of mortgage rates and slightly better economic growth prospects are helping to stabilize the market, but we are still in a period of adjustment where realistic pricing by sellers is crucial.”
Conclusion
The UK housing market in October 2024 continues to indicate a cautious recovery, with house prices steadily inching upwards despite the persisting challenges posed by high mortgage rates. While regional variations persist, the overall trend suggests that the market is gradually stabilising, albeit at a more subdued pace than in previous years.