Predicting House Prices: Anticipated Trends in Asking Prices for 2024
Posted on Monday, 4 December, 2023
Average mortgage rates have been steadily decreasing since July, providing a more stable and predictable environment for homebuyers compared to the volatility of the previous year’s mortgage market. Currently, the average two-year fixed rate stands at 5.52%, and the average five-year rate is 5.11%.
Despite the improved outlook for mortgage rates and indications that the Bank of England Base Rate has plateaued, affordability remains a challenge for many prospective buyers. The Bank suggests that Base Rate cuts are not imminent and are likely to remain elevated throughout 2024, limiting the spending power of some buyers.
As a result, motivated sellers may need to adopt more competitive pricing strategies to secure buyers in 2024. Estate agents are expected to exert additional effort in building property chains, especially at the entry level where first-time buyer affordability is expected to remain constrained, as per insights from Rightmove.
Rightmove’s forecast relies on comprehensive market data, a house price predictive model, and input from estate agents and experts. A year ago, Rightmove predicted a 2% drop in average new seller asking prices for 2023, and the current figures show a 1.3% decrease year-on-year.
The projection for the end of 2024 is a 1% decrease in average new seller asking prices nationwide, marking a shift towards more normal market activity following the intense post-pandemic period. The average time for a seller to find a buyer has increased from 45 days to 66 days, and this trend is expected to persist unless sellers price competitively.
During 2023, the level of price reductions has risen, with 39% of properties experiencing a reduction compared to 29% the previous year. Rightmove recommends that new sellers set a competitive initial price to maximize impact and increase the likelihood of a successful sale.
Buyers entering the market in 2024 are in a favorable position to negotiate and take their time choosing the right home. However, the number of available homes for sale has only recently returned to pre-pandemic levels, and there is no indication of a surge in new listings.
With more choices and fewer active buyers, sellers who price attractively are expected to capture buyer attention. Tim Bannister of Rightmove emphasizes that sellers must be willing to price temptingly to stand out in the market. While the overall market has performed better than anticipated, sales agreements are 10% lower than the more normal market of 2019. Sellers are advised to price even more competitively in the coming year to secure buyers.
Rightmove predicts a modest average fall of 1% in new seller asking prices for the next year. This prediction may impact different regions of Great Britain in varying degrees, depending on local market dynamics. In areas with more discretionary sellers and limited homes for sale, prices may remain flat or slightly increase. In contrast, areas with affordability-stretched buyers or sellers needing quick transactions may experience more competitive pricing.
While 2024 is expected to be a somewhat subdued and challenging year for some buyers and sellers, the underlying demand at the right price suggests that a significant drop in prices is unlikely. The housing market consists of diverse local markets, each with its unique supply and demand dynamics. The overall sentiment is cautiously optimistic, with opportunities for sellers and agents who employ effective pricing and marketing strategies.