House Prices - a review & a look forward…
According to Rightmove, the UK's average new seller asking prices are expected to dip by 1% by the close of 2024. The market is shifting towards normalcy post-pandemic, leading sellers to potentially price more competitively as the property website predicts increased efforts from agents to build chains, especially for first-time buyers facing stretched affordability.
While mortgage rates are anticipated to settle, they are expected to remain elevated, impacting buyer budgets, particularly in the lower and middle market sectors. The average two-year fixed residential mortgage rate slightly decreased to 6.03%, while the five-year fixed rate fell to 5.64%.
Despite improved mortgage rate outlooks, Rightmove notes that affordability remains strained for many buyers. The level of price reductions has increased, with 39% of properties experiencing reductions during marketing, compared to 29% in 2022 and 34% in 2019.
The time for sellers to find a buyer has extended from 45 to 66 days, leading competitive pricing to expedite the process. Rightmove anticipates that sellers with a pressing need to attract buyers will continue pricing competitively into 2024.
Buyers in 2024 are expected to have more options, but the supply of homes for sale has only recently reached pre-pandemic levels. With increased choice and fewer buyers, sellers who strategically price their homes are more likely to attract attention.
Rightmove's prediction of a modest 1% average fall in new seller asking prices in 2024 reflects the diverse dynamics of local markets. Areas with more discretionary sellers and limited supply may see flat or slightly increased prices compared to the current year.
Despite a previous forecast of a 2% drop in 2023, the current 1.3% lower year-on-year suggests a more favorable market condition. Jeremy Leaf, a former Rics residential chairman, finds the forecast encouraging, noting that modest changes are unlikely to significantly impact buyers' intentions. The anticipation of falling mortgage payments and living costs, coupled with stable wage increases, contributes to buyer confidence in the market's stability. Looking ahead, the expectation is for minimal price changes, as many homeowners face the end of fixed-rate mortgages, potentially limiting their ability to make a move.