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UK Property Market Poised for 2024 Recovery

UK Property Market Poised for 2024 Recovery

The UK property market is on the verge of recovery this year, after experiencing a modest decline in average house prices by £4,000 during the previous year.

Official statistics reveal that the average price of a home dipped by 1.4% in the year leading up to December 2023, showing signs of stabilisation after a more significant drop of 2.3% in November. This suggests the downturn triggered by rising mortgage costs may have reached its lowest point.

The surge in property values since 2020, which saw an increase of over £60,000, had halted by the end of 2023, with the average house price adjusting to £285,000 from its peak. However, experts anticipate a resurgence in demand, particularly from cash buyers and first-time purchasers, buoyed by more accessible mortgage and bridging rates, potentially driving prices back to their peak levels.

Economists are optimistic as the Bank of England is expected to reduce interest rates from 5.25% to 4.5% this year, which should result in more favorable mortgage offers. Early signs of recovery have already been observed, with reports from Halifax and Nationwide indicating a rebound in prices as mortgage costs begin to decline.

The decline in house prices has not been uniform across the UK. England recorded the highest average prices and the most significant drop last year, while Scotland saw a price increase, narrowing the price gap across the nations. The disparity in regional performance was also notable, with the north-west of England experiencing a price increase, in contrast to London, which saw the most substantial decrease.

Amidst the fluctuating house prices, the rental market has seen a significant rise, with private rents increasing markedly since the onset of the coronavirus pandemic. The latest figures show a 6.2% rise in rental prices over the twelve months leading to January 2024, with London experiencing the highest increase.

As mortgage and bridging finance rates decrease and real incomes recover, the housing market is expected to regain strength, offering a more affordable pathway for buyers and signaling a potential end to the slowdown experienced in 2023.

Source: The Guardian

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