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UK house prices on track to rise 3% in 2024

A leading estate agent has said that UK house prices are on track to beat forecasts of a decline in 2024 as a mortgage pricing war and expectations of Bank of England interest rate cuts rekindle the property market.

After a year of sustained price falls in 2023, the global property consultancy Knight Frank said it was updating its forecast for UK house prices to rise by 3% in 2024, up from an earlier estimate of a 4% drop.

Against a backdrop of falling inflation and growing anticipation of interest rate cuts, it said it expected that rising mortgage approvals seen in recent months would translate into at least a 10% increase in transactions this year.

The online property website Rightmove said asking prices for new sellers had risen by an average of 1.3%, or £4,571, between December and January, the biggest increase for the time of year since before the pandemic.

While prices remain 0.7% lower overall than a year ago, it said there had been a “tentatively promising” start to the year, with 15% more new properties coming onto the market and growing buyer demand. It said that about 20% more sales were agreed at the start of January than at the same time a year ago, indicating returning confidence.

Since Christmas, Rightmove said it had seen nine of its 10 busiest days on record for people getting a mortgage in principle to see what they can afford to borrow.

Banks, building societies and estate agents had previously all predicted falling house prices for 2024, but a succession of unexpected monthly rises in the past three months and a larger-than-expected fall in the official UK inflation rate has prompted a reassessment.

Housing will, however, remain unaffordable for many, with recent remarks by NatWest chair Howard Davies that getting on the housing ladder was “not that difficult”, sparking a storm of criticism.

However, mortgage deals for those hoping to buy have become slightly cheaper after rates rose sharply in the wake of Liz Truss’s disastrous mini-budget of autumn 2022. A five-year fixed-rate mortgage now averages 4.86%, compared with 6.11% in the July 2023 peak, and rates are widely expected to come down further.

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