Is Now the Right Time to Buy a House in the UK

risk to buy a house in this climate photo

Now that we have entered 2024 the uncertainty in the property market is still apparent. At the end of last year we saw a couple of months of significant falls in The UK national house price and it will be interesting to see if this trend continues. Mortgage Rates did start to fall from their peak last year but in the the first half of 2024 mortgage rates have increased, as of June the average 2 year rate is 5.93% and a five year fixed deal is 5.50%. Since last year we have seen lenders go from optimistically predicting that the base rate will fall to now changing their stance as the Bank of England have not lowered the base rate for 10 months. If mortgage rates fall it will make buying a house more accessible for many, in theory this should get the property market moving faster and add a boost the stagnant property market that we are currently experiencing.

Certain costs for homeowners may still hold the market back, inflation at the shops and higher energy bills have caused a cost of living crisis. Rishi Sunak has proudly announced that inflation figures for April show that the rate of inflation has fallen to 2.3%, which is down from a high of 11.1% during October 2022. As to date the positive news about the rate of inflation has not transferred to consumers spending more at the shops as recently reported by Barclays. Household bills have risen such as council tax rising 5% and mobile phone bills rising 8% resulting in consumers having less money to spend in the shops.

According to Rightmove asking prices are at an all time high and they have recorded that there are 17% more sales agreed during the first four months of the year. With more house buyers than sellers entering the market house prices could continue to rise. There is conflicting data being reported by different indices as can be seen below in this article:   

What Are the Current House Price Figures?

In the UK there are various different sources that analyse the market and produce average house price figures with differing results so here’s a look at what each index has reported:

Halifax

The Halifax House Price Index reported in April shows that house prices increased a modest 0.1% in April and that’s after a 0.9% decline that was reported in March. On a yearly basis house prices are up by 1.1%. It is important to note that Halifax’s analysis is based on the values of mortgage applications. According to Halifax the average house price now stands at £288,949 which is around £2000 lower than at the beginning of the year. The Halifax national house price chart can be seen below:

Halifax House Price Index April 2024

Nationwide

The Nationwide House Price index for April shows a monthly increase of 0.4% and a year on year increase of 1.3%. Nationwide economist Robert Gardner as stated that house prices have modestly risen due to a normal seasonal rise. He believes consumers are showing resilience even though their are increased mortgage rates and household costs. The report for May 2024 shows that the national house price is £264,249.

Chart from Nationwide House Price Index May 2024

Nationwide House Price Index May 2024

Zoopla

Similar to Rightmove, Zoopla record advertised “For Sale” prices so they are always more optimistic than Land Registry results and prices that are reported by mortgage lenders. Zoopla are reporting that house prices have fallen just 0.1% since the same time last year. According to Zoopla the average house price currently stands at £264,300. The headline news is that estate agents have the most amount of homes listed for sale in the past 8 years. Interesting statistics can be seen in this report for example estate agents currently have a average 31 properties listed and of them 31% were originally listed in 2023.

Zoopla Key Points May Table

Zoopla Key Points May

Rightmove

House Prices on Rightmove are based on asking prices and the UK average now stands at £375,131, a new record high national house price for the UK. The full report for May is here. The national average has been dragged up by property at the top of the ladder which has increased by 1.3% since the same time last year, this is compared to the national average which is up 0.8%.

Office of National Statistics

The Office of National Statistics now reports data in a report that is called Private Rent and House Prices. The data for May shows that over the past year the national house price has increased 1.8% and now stands at £283,000. This figure is based on sold prices recorded at The Land Registry and is a few months old, up to March 2024.

Should You Buy a House in 2024 or Wait?

 

2024 year mosaic

This general consensus from analysts is that house prices will moderately fall during 2024. This should be taken with caution, dramatic predictions of house prices falling between 5% and 10% during 2023 didn’t materialise and house prices are now higher than they were before. Therefore, these predictions of doom and gloom for the housing market during 2024 could also be wrong.

It’s understandable why analysts still have a negative outlook. Interest rates have not fallen and there is still a cost of living crisis, where household bills and expenditure have been pushed up by the inflation that we have experienced in the past year. However, the housing market has remained resilient and in our opinion prices have already bottomed out during January 2024. Furthermore, if interest rates do fall and mortgage rates become lower and buying a house becomes more affordable, then many more buyers will enter the market and push prices up.

Here are some of the the predictions of how far house prices could fall during 2024:

Zoopla2%
Halifax-2% – -4%
Lloyds Bank-2.4%
Rightmove-1%
Predicted House Price Falls 2023 from hoa.org.uk

House Prices May Continue to Fall But Then Rise Due Inflation

It should also be noted that the value of the pound has now changed, prices at the shops have increased by around 25% since April 2022, at some point in time house prices should rise partly due to the new lower worth of the pound.

At some point in the future there will be a recovery and you would expect a rise in house prices that will be associated with the rise that we have seen with the prices of our goods, bills and increased wages.