House price forecast: what will happen to asking prices in 2024?

Average mortgage rates have now fallen steadily since July, providing movers with much more stability and certainty over the type and cost of mortgage offer they are likely to receive compared with the more volatile mortgage market of this time last year. The average two year fixed rate is now 5.52% and average five year rate is 5.11%. 

However, while the outlook for mortgage rates has improved and there are signs that the Bank of England Base Rate has peaked, affordability remains stretched for many buyers. With the bank signalling that any Base Rate cuts are not imminent and are likely to remain elevated during 2024, some buyers’ spending power will remain limited. 

Consequently, motivated sellers are likely to have to price more competitively to secure a buyer in 2024, and estate agents will work even harder to build chains, especially at the bottom end where first-time buyer affordability will remain stretched, accordif to Rightmove. 

The property portal’s forecast is based on its whole of market data and house price predictive model using millions of supply, demand and pricing data, along with insights from estate agents and a panel of Rightmove experts. 

A year ago, Rightmove predicted average new seller asking prices would drop by 2% in 2023, and they are currently 1.3% lower year-on-year. 

Rightmove now estimates that average new seller asking prices will be 1% lower nationally by the end of 2024, as the market continues its transition to more normal levels of activity following the frenetic post-pandemic period. 

The average time for a seller to find a buyer has jumped from 45 days this time last year to 66 days now, and this upward trend is likely to continue unless sellers are competitive on price. 

The level of price reductions has increased during 2023, with 39% of properties now seeing a price reduction during marketing compared to 29% last year, and 34% in 2019. New sellers will need to compete with their cut-price neighbours, and work with their agent to start their marketing with a competitive price, rather than starting too high and needing to reduce later.

Rightmove research shows that pricing right at the outset maximises the initial impact among local buyers and gives new sellers a much greater likelihood of a successful sale.  

 While buyers are much more likely to see a choice of homes for sale in their area that suits their needs compared to the stock-starved pandemic years. Purchasers coming to market in 2024 are in a strong position to negotiate on price and take more time to choose the home that is right for them. 

However, the number of available homes for sale has only just increased to pre-pandemic levels and there are no signs of a wave of new listings which would create a glut of homes for sale.

With more choice and fewer buyers on the ground, it will be those sellers who are willing and able to price temptingly who will attract buyer’s attention, according to Rightmove’s Tim Bannister.

He said: “This year has been better than many predicted, with no significant signs of forced sellers, lower than expected price falls, and good buyer demand for the right-priced quality properties. However, it has been a challenging change in mindset for some sellers to transition from the frenzied market of the previous few years. The level of sales being agreed is 10% lower than at this time in the more normal market of 2019, so sellers will need to price even more competitively next year to make sure that they secure a buyer.  

“We predict a modest average fall of 1% in new seller asking prices next year. This will be felt more keenly in some areas of Great Britain than others. The housing market is made up of thousands of local markets, each with their own unique dynamic of supply and demand. In areas with more discretionary sellers and fewer homes for sale, we may see new seller asking prices remain flat, or even very slightly increase compared to this year. 

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

“An average drop of 1% in prices reflects our prediction that it’s likely to be another muted, and in parts challenging, year for some buyers and sellers in 2024. However, the better than anticipated activity this year has shown that many buyers are still getting on with satisfying their housing needs, and there is considerable opportunity for sellers and their agents to attract these buyers with the right pricing and marketing strategy. This underlying level of good demand at the right price makes it unlikely that we will see a more significant drop in prices next year.” 

 

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