UK house prices expected to rise modestly over 2024, says Halifax

The average UK house price rose by 0.1% in April month-on-month, after a fall of 0.9% in March, according to an index.

Halifax, which released the report, said that typical house prices in early 2024 have “largely plateaued”.

Property values grew by 1.1% annually, accelerating from a 0.4% rise recorded the previous month.

A typical UK home cost £288,949 in April, compared with £288,781 in March, Halifax said.

Halifax house price index: year-on-year change in average UK house price
(PA Graphics)

Amanda Bryden, head of mortgages, Halifax, said: “While there is always much scrutiny of monthly price changes – and a degree of volatility is to be expected given current market conditions – the reality is that average house prices have largely plateaued in the early part of 2024.

“This reflects a housing market finding its feet in an era of higher interest rates.

“While borrowing costs remain more expensive than a few years ago, homebuyers are gaining confidence from a period of relative stability.

“Activity and demand is improving, evidenced by greater numbers of mortgage applications so far this year, while at an industry level mortgage approvals have reached their highest point in 18 months.

“Our recent research also found that buyers are adjusting their expectations, with first-time buyers in particular compensating for higher borrowing costs by targeting smaller properties. We see this reflected in property prices for the first few months of this year, with the value of flats rising most sharply, closing the ‘growth gap’ on bigger properties that’s existed for most of the last four years.

“However, we can’t overlook the fact that affordability constraints are still a significant challenge, for both new buyers and those rolling off fixed-term deals.

“Mortgage rates have edged up again in recent weeks, primarily as a result of expectations around future Bank of England base rate changes, with markets now pricing in a slower pace of cuts.

“If, as is still expected, downward moves in bank rate come into play later this year, fixed mortgage rates should fall.

“Combined with the resilience displayed by the housing market over recent months, we now expect property prices to rise modestly over the course of 2024.”

Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners said: “While mortgage rates eased dramatically at the start of the year as hopes of imminent rate cuts soared, they have undergone a reprice in recent weeks amid market revisions over the magnitude and timing of rate cuts.

“A rate cut at this week’s (Bank of England) Monetary Policy Committee meeting appears unlikely, with rate setters likely to stick to the ‘higher for longer’ mantra for now as they wait for concrete evidence that inflationary pressures really have eased.”

Guy Gittins, chief executive of estate agent Foxtons said: “Many buyers are already pressing ahead with their plans to purchase with hopes of mortgage rate reductions on the horizon.”

Jason Tebb, president of property website OnTheMarket said: “While prices have picked up slightly after March’s dip, buyers remain sensitive as to what they are prepared to pay and perceive themselves to be in a good negotiating position.”

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “Once the Bank of England is confident inflationary pressures have eased and starts cutting interest rates, this will provide a welcome boost for the market and should help increase confidence and activity.”

Marc von Grundherr, director of estate agent Benham and Reeves said: “While the road ahead may be a challenging one, we remain in a far better place than we were this time last year and that sets a solid foundation for the market to now kick on and post a stronger performance in 2024.”

Peter Arnold, EY UK chief economist, said: “There is growing evidence that the housing market has passed the bottom. The substantial fall in mortgage rates since last summer, combined with strong growth in nominal wages, has reduced the scale of the mortgage affordability problem.

“This has helped to entice some buyers back to the market, leading to a recovery in transactions and putting a floor under prices.”

Iain McKenzie, chief executive of the Guild of Property Professionals, said: “The next few months may remain a mixed picture for house price growth, but the warmer months tend to be stronger for the industry, as people are more likely to eye up a move.”

Sarah Coles, head of personal finance, Hargreaves Lansdown said: “Banks are pricing in the fact that the Bank of England’s cuts are expected later than they had hoped for earlier in 2024…

“In the South, prices tend to be higher – the priciest are in London where the average home costs £539,336.

“It means mortgages are bigger, and so higher rates hit harder. Buyers are having to wait, and hope that rates fall, in order to afford the kind of property they really want to live in – or lower their ambitions and buy somewhere they can bear to live with instead.”

Here are average house prices and the annual change, according to Halifax (regional annual change figures are based on the most recent three months of approved mortgage transaction data):

– East Midlands, £239,579, minus 0.5%

– Eastern England, £329,723, minus 1.1%

– London, £539,336, 0.1%

– North East, £172,538, 2.2%

– North West, £231,599, 3.3%

– Northern Ireland, £192,502, 3.4%

– Scotland, £204,579, 1.5%

– South East, £384,972, minus 0.6%

– South West, £303,262, 0.4%

– Wales, £218,775, 1.1%

– West Midlands, £253,069, 1.2%

– Yorkshire and the Humber, £207,166, 1.5%