UK house prices have been forecasted to decline in the year ahead. However, the average UK house price for December increased for the third consecutive month according to Halifax. The increase has not deterred their expectation of a fall in 2024 of up to 4%. Buyers are not returning to the market as the data would suggest, but rather there are fewer properties in which to purchase. Supply has dipped further, and it has pushed the typical home purchase to £287,105. 

The current rate of the Bank of England is 5.25%. It is the highest rate in fifteen years, and for those borrowing a large amount, the interest rate matters to the point of pushing something beyond affordability such as in buying a home. Homeowners remortgaging at the end of their mortgage term could face sliding into arrears due to higher interest rates. This is why when lenders begin to lower their offerings below the Bank’s rate borrowers should take notice.

The opportunities that are available for hopeful home buyers are fewer than would have been found only a few years ago. According to a recent report from Nationwide, the deposit paid by a typical first-time home buyer would be 105% of the buyer’s average gross yearly income. In addition, the mortgage repayment would take approximately 38% of monthly take home pay. The cost of becoming a homeowner has grown exponentially and there are several factors that have made it so.

The New Year usually brings about a positive outlook as new beginnings bring about new opportunities and new outlooks. There are hopeful viewpoints and certainly homeowners are not the exception. In 2024, many are hoping to find relief from the overwhelming financial strain that 2023 brought them, and others are hoping to avoid the same fate in the new year. Borrowing has grown exponentially expensive and in just two years, homeowners have lost the opportunity to pay interest rates based on an historically low base rate of almost zero at 0.1% to a base rate of 5.25% which is a fifteen year high.

In the final report for the year, Nationwide released their data revealing a decline of 1.8% in the average UK house price to £257,443. Cash purchases remain fairly steady and running above cash buys recorded prior to the pandemic, while those purchasing a home with a mortgage have declined to below 20% of pre-pandemic levels. The higher cost in borrowing is considered to blame for fewer home buyers in the housing market and Nationwide forecasts no growth in 2024, but possible further decline.

There is no doubt first-time home buyers are having a harder time climbing onto the property ladder than the buyers who purchased two years ago. Interest rates are higher, and house prices remain elevated after numerous record-breaking boosts to the average house price throughout the pandemic. Inflation has taken away money from budgets making saving for a deposit more difficult. In addition, many home buyers are coming to lenders with complicated credit histories due to the impact the pandemic had on their earnings.