EP143: WEALTH: Despite the headlines house prices ended the year only down a touch. But what will 2024 bring?

We ended 2023 on more positive news that inflation has fallen again to 3.9% from 4.7% in October, which will ease the pressure on the Bank of England to raise rates further. Welcome news to those 2 million people due to remortgage over the next 12 months.

House price forecasts at the beginning of 2023 were mostly incorrect. Knight Frank and Savills were forecasting decreases of 10%, and Capital Economics forecast an even more gloomy 15% decrease. Unfortunately, the mainstream media picked up on these negative predictions and scared us into paralysis. The good news is that prices in the UK were much more resilient and only decreased by 1.2% overall.

KEY POINTS
House prices: Nationwide, Halifax and Rightmove have reported: -2.0%, -0.6% and -1.1% over the last 12 months. What is interesting is that monthly figures actually show that prices increased from last month. Nationwide and Halifax reported increases over 3 consecutive months.

 ONS figures show increases of -1.2% nationally and -3.6% in London. This ONS data has a 3-month lag time, as it records the prices that properties actually sold for and is taken from data from the Land Registry. The rate of house price growth is levelling off.

Rental market: Rents have increased by 8.9% nationally and 8.1% in London. The average monthly rent is now £1,279 nationally, and £2,174 in London. They are predicted to increase by 25% over the next 2 years, as more people will be renting due to the higher cost of borrowing.

Interest rates: The Bank of England rates remained on hold at 5.25%. The Bank stated that they may keep rates on hold for longer than a few months until the inflation target of 2% is met. The latest inflation figures of 3.9% will mean that the Bank of England could start reducing rates as soon as the end of March 2024.

Mortgage rates: Lenders have started to reduce the rates available on 2 year and 5-year fixed terms, as they predict that Bank of England rates will decrease to around 4% over the next two years.

Outlook: Eyeedul of My Property Consultant forecast that UK house prices would be level for 2023, and was correct. He believes that prices may remain constant for the next 6 months, but some areas may see slight decreases (around 5%) but it does depend on the area and type of property. Interestingly, Rightmove forecast prices to fall by only 1% and some forecasters are already predicting increases of 5.9% during 2024.

CONNECT WITH EYEEDUL
Website: https://myproperty-consultant.london/
LinkedIn: https://www.linkedin.com/in/eyeedul-haque/
Instagram: @eyeedul_mypropertyconsultant