The ONS data indicates that the slowdown in the housing sector triggered by higher mortgage costs in 2023 might be ending, and the downward trend in house prices has likely reached its lowest point.
Despite a significant increase of over 20% in house prices since 2020, adding more than £60,000 to the average UK house price, the latest figures show an annual decrease of £4,000, bringing the average cost to £285,000 in December. Prices had peaked at £291,100 in autumn 2022.
Economists anticipate that demand from cash buyers and first-time buyers, who now have access to much cheaper mortgages compared to 2023, will drive prices back towards their peak this year. This renewed level of affordability should also tempt more investors into buying investment property in the buy-to-let market, especially when you consider that the North West buy-to-let sector is expected to see returns of 9.2% this year (according to Savills), while rental growth is predicted to reach around 6%.
Forecasts suggest that the Bank of England will reduce interest rates from 5.25% to 4.5% this year, leading lenders to lower their latest fixed-rate mortgage offers.
Halifax and Nationwide’s data show prices rebounding since the beginning of the year as mortgage loan costs decline. Knight Frank, amid renewed confidence in the property market, cautiously revised their 2024 forecast, expecting property prices to increase by 3% over the next 12 months.
Find Out More: For more UK property investment insights, check out our guide on buying property through a limited company.
