Signs of Housing Market Recovery

Over the past 12 months, the UK housing market has been slowing resulting in house prices falling. However, according to official figures the average UK house price fell by only £4,000 last year. And due to a slowdown in inflation and a buoyant jobs market, this is leading to speculation that the housing market is expected to stage a recovery in 2024.

The ONS said the price of the average home decreased by 1.4% in the 12 months to December 2023. Which is an improvement on an annual fall of 2.3% recorded in November. However fast forward a month into January 2024, and the UK’s biggest mortgage lender (Halifax) said a typical home now costs £291,029 on average, a 2.5% jump from January 2023.

The recent figures reported by Halifax suggest that the slowdown in the housing sector in 2023, triggered by rising mortgage costs, may be over. With expectations of rates being cut this year, and with inflation slowing down. There is growing confidence that the housing market will make a recovery this year.

Although confidence is growing in the market, the chance of a recovery will be heavily dependent on interest rates being cut by the Bank of England. In the past 12-18 months, first-time buyers and homeowners looking to re-mortgage properties have faced higher borrowing costs. With interest rates staying firm at a 16-year high of 5.25% since August 2023. The Bank of England is forecast to cut interest rates this year from 5.25% to 4.5%, prompting lenders to cut their fixed-rate mortgage offers. If the rates are cut, this will certainly result in a recovery and will likely result in house prices increasing.