What will happen to house prices in 2024?

Property prices remain one of the hottest topics as we move into 2024. The housing market this year has been better than many predicted, with lower-than-expected falls in asking prices, and good levels of demand from home-buyers for the right-priced homes. However, rising mortgage and interest rates have stretched affordability of many people planning to move.

Rightmove forecast a year ago that the average new seller asking prices would drop by 2% in 2023, and prices are currently 1.1% lower year on year. The average asking price of a home in Great Britain is now just above £355,000.

Although Rightmove have reported a smaller than expected decrease in asking prices, the number of properties being sold below asking price has increased with 74% of Propertymark member agents reporting up to 90% of sales agreed throughout the month of October 2023 were agreed below the asking price.

Will asking prices fall in 2024?

So, will asking prices fall in 2024? The housing market is continuing to return to more normal levels of activity following the frenetic post-pandemic period. Rightmove predict that average new seller asking prices will be 1% lower nationally by the end of 2024, as competition increased among sellers to find a buyer.

Rightmove property expert Tim Bannister says: "It's likely to be another muted year for the market, however the better than anticipated activity in 2023 has shown that many buyers are still getting on with satisfying their housing needs. We predict a modest average 1% fall in new seller asking prices in 2024. The underlying level of good demand at the right price makes it unlikely that we will see a mores significant drop in prices next year."

"In areas where sellers are struggling to attract affordability-stretched buyers, or needing to sell quickly due to a change of circumstances, new job opportunity, or strong desire for a lifestyle change, we are likely to see even more competitive pricing." says Tim.

A recent report from Nationwide suggested that October volumes in residential sales were down by around 20% when compared with 2022, with new build volumes down by 25%.

Propertymark recently published the number of sales agreed per member branch decreased again in November 2023. Whilst seasonal patterns explain this trend, the year-to-date performance in 2023 is lower than in either 2021 or 2022.

Asking prices remain higher than market expectations.

In October 2023 the number of agents reporting that properties were selling for less than asking price has risen dramatically from 76% in September to 90% in October. Propertymark suggest this is part of a longer trend, which suggests that valuations and market expectations are severely mismatched.

What's happening with asking prices within the new homes market?

Rightmove reports the level of sales being agreed across the property market is 10% lower than at this time in the more normal market of 2019. In 2023, we've also seen 39% of properties with an asking price reduction during marketing, compared to 29% in 2022, and 24% in 2019.

The average time for a seller to find a buyer has jumped from 45 days this time last year, to 66 days now. Home-sellers who have been competitive on price have been able to find a buyer more quickly. See below chart (figure 14).

From data recorded in 2001 and beyond, the average premium between a new build home and a residential property sat at 24%. In July 2023 it was reported that the new homes premium currently sits at a steamy 45%. When reviewing current transactions levels across both the new build and residential market we can see sales rates have dipped considerably when compared with previous years which would suggest new build asking prices are likely to decrease over the coming months to reduce the gap in premium between new build property and residential property in order to increase transaction levels and in turn, sales rates.

In short, we can see that realistic asking prices coupled with more affordability within the market and consistent interest rates will support increasing volumes in property transactions throughout 2024 and beyond.

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