Halifax initially forecasted an 8% decrease in house prices for 2023, yet homeowners ultimately experienced a 1.7% increase in their property values.
Consequently, real estate agents seem less inclined to agree with the lender’s gloomy outlook for the current year, predicting a more modest price decline of 2% to 4%.
Verona Frankish, the CEO of Yopa, commented:
“Despite the perception that monthly house price growth is too volatile to reliably indicate market improvements, it’s clear that the market is moving in a positive direction.
We’ve witnessed house prices rise for three consecutive months. Moreover, both quarterly and annual growth rates have shown an uptick, even in the face of a challenging year for the market.
Given that interest rates are currently stable and expected to decrease, we don’t foresee a downturn in the market for 2024, especially after enduring the most difficult period.”
Guy Gittins, CEO of Foxtons, also noted that the market ended 2023 on a strong note, driven by a surge in optimism following recent stabilizations in interest rates.
He stated, “The market is well-positioned for what we anticipate will be a significantly improved year.”
Economists Predict 3% Increase in House Prices This Year
Recent data from lenders showing a significant rise in house prices has led economists to adjust their projections for the year upwards.
Capital Economics now anticipates a 3% increase in house prices in the last quarter of this year compared to the same period in 2024. This is a shift from their earlier prediction of a 1.5% decline during the same timeframe.
Assistant economist Imogen Pattison remarked:
“The notable 1.1% month-on-month surge in the Halifax house price index is a clear indicator that the decrease in mortgage rates is effectively boosting house prices.
With the continued decline in mortgage rates, we expect house prices to rise in the first quarter.
There’s also a significant shift in annual house price growth, moving from a 1% decline to a 1.7% increase. This change is partly due to the substantial decrease in house prices seen last year.
Looking ahead to this year, the reduction in average quoted mortgage rates from 5.9% in July 2023 to just above 4% currently is set to enhance affordability. This improvement means we can anticipate a sustained recovery in demand from buyers with mortgages.”
