UK homeowners could see a significant financial lift next year, with property prices forecast to rise by 4%. This potential growth translates into a £12,000 increase in value for the average homeowner, based on the current national average house price of £300,000.
The positive outlook comes as experts predict the Bank of England may lower its base rate from 4.75% to 4% by the end of the year, easing pressure on homeowners with mortgages.
According to Robert Gardner, chief economist at Nationwide, this shift will likely sustain activity in the housing market, albeit with some constraints due to affordability challenges.
Gradual Recovery Expected in Housing Affordability
While the projected rise in property values is encouraging, Gardner urged caution about the pace of recovery in housing affordability. “Lower interest rates will help, and income growth outpacing house price growth will also help. But it’s going to take time for that process to have much of an effect,” he said.
This perspective is echoed by Halifax, the UK’s largest mortgage lender, which recently reported a 1.3% rise in property prices during November, bringing the average house cost just under £300,000.
- November increase: 1.3%
- Average property price: £299,800
- Forecasted 2024 increase: 4%
Based on these figures, homeowners could anticipate the following growth in property value:
| Current Property Value | 4% Increase in 2024 | Total Value Gain (£) |
|---|---|---|
| £300,000 | £312,000 | £12,000 |
| £200,000 | £208,000 | £8,000 |
| £400,000 | £416,000 | £16,000 |
Insights on the 2024 Mortgage Market Outlook
Tom Bill, head of UK residential research at Knight Frank, provided additional insight into the mortgage market. He noted that while fixed-rate mortgages remain above 4%, a drop in interest rates could stimulate demand.
“You have a certain amount of people that need to move because of schools and jobs,” Bill explained. “But when mortgages dip below 4%, you start to see more discretionary demand kick in, and that will be slower to come back.”
Bill also suggested that lenders are likely to reduce mortgage rates in January to attract new customers. “You may see the odd sub-4% mortgage even in the first six months, but I’m not sure, you’re going to see that widespread choice of three-something-per-cent mortgages that we had late summer,” he added.
Key expectations for mortgage rates in 2024:
- Gradual reduction in rates beginning January.
- Occasional sub-4% offers by mid-2024.
- Wider availability of rates below 4% likely delayed until later in the year.
Assessing the Dual Impact of Property Values and Mortgage Trends
The combination of rising property values and improving mortgage rates paints a mixed picture for the UK housing market. For homeowners, the expected £12,000 boost could provide a welcome financial cushion.
However, affordability barriers remain a concern for first-time buyers and those looking to upgrade.
As income growth continues to outpace house price increases, the long-term outlook appears promising. Yet, the pace of recovery will depend heavily on broader economic conditions and the trajectory of interest rates in 2024.
For now, homeowners and prospective buyers alike are advised to monitor market developments closely as the new year approaches.
