The UK housing market in 2024 is showing signs of stabilisation after a period of volatility. Following a notable drop in house prices during late 2022 and into 2023, prices have begun to level off, with recent figures indicating a slight increase of about 0.3%. However, house prices remain approximately 2.8% below their 2022 peak, and forecasts suggest a further decline of between 1-3% by the year’s end.
A key influence on the market has been the Bank of England’s decision to reduce interest rates from 5.25% to 5%, which has led to some mortgage rates falling below 4% for buyers with larger deposits. Despite this, average mortgage rates are still above 5%, and high borrowing costs continue to deter many potential buyers.
Supply and demand imbalances remain a critical factor, particularly as there is still a shortage of housing stock, which is helping to maintain prices in some areas. More affordable regions in northern England and Scotland have seen stronger price resilience. Although the price corrections have eased some affordability pressures, the ratio of house prices to wages remains high, posing challenges for first-time buyers and those looking to move up the property ladder.
Experts anticipate a more significant recovery by 2025 as mortgage rates stabilise and inflationary pressures ease. However, in the short term, slow growth or slight declines in house prices are expected, with the market likely to continue adjusting to broader economic factors like the ongoing cost-of-living crisis and subdued consumer confidence
