As 2023 comes to a close, we have broken down the top property trends this year, as well as a look ahead into the 2024 forecast.
Whether you were buying your first home, upsizing, or selling, inflation rates have massively impacted the property market this year.
According to the property experts Zoopla, 2023 was dominated by mortgage rates, as the Bank of England hiked the interest base rate from 0.1% to 5.25% in a bid to tackle soaring inflation.
As a result, homeowners in 2023 have been consumed by what is happening to mortgages, which affected how people bought and sold property this year. But, despite this, figures show the 2023 housing market was more resilient than many predicted as it continued its slow transition from frenzy to more normality.
According to statistics, the number of sales agreed in the year to date is just 13% behind the same period last year. Rightmove’s director of property science, Tim Bannister explained that this is a ‘better-than-expected figure’ given that the 2022 market was much more frenetic, and three of the ten strongest months on record for buyer demand occurred in the first half of that year.
He said that whilst at a national level average asking prices have seen a marginal fall of 1.1% compared to last year, there is a mixed picture across Great Britain, which has thousands of hyper-local markets, highlighting the need for sellers to price in line with their local market trends.
Tim Bannister, Rightmove’s Director of Property Science said:
“With mortgage rates more settled and on a slow downward trend, potential movers who have been biding their time and waiting for calmer market conditions may decide to act in the early part of next year.
“Indeed, there’s always a big post-Christmas upturn in Rightmove traffic, with early bird-buyers starting their search on Boxing Day. This year’s upturn will be eagerly anticipated by those who are keen to sell, especially family movers who are considering having an estate agent board put up as the Christmas tree comes down.
“Rightmove’s research and agent feedback is that the best strategy to sell in the current market is to price temptingly at the outset of marketing, rather than testing the waters with a higher price.
“This will hopefully avoid the need to reduce your asking price later, and capture that early-bird buyer’s interest in the New Year, whilst also avoiding the stress of drawing out the selling process and risking having the for-sale board still up at Easter.”
Mortgage rates
Figures show that average mortgage rates have now fallen for 19 consecutive weeks, with the average 5-year fixed mortgage rate now 5.11% compared to 6.11% in July. As a result, one trend which is expected to emerge next year is the return of more family movers who now want to trade up for more space.
With the mortgage market more settled and the expectation being that the Bank of England Base Rate has peaked, those looking to move up the ladder and take out a larger mortgage, many of whom put their plans on hold after the mini-budget to wait and see how this year played out, may now feel in a stronger position to act.
Sellers
However, sellers still need to price more aggressively than their local competition to secure a buyer, especially those with a pressing need to sell. While current trends suggests that the mortgage market will be more stable, interest rates are likely to remain elevated next year, continuing to put pressure on buyer affordability.
Rightmove therefore predicts that national average asking prices will drop by an average of 1% in 2024.
First-time buyers
According to Zoopla, despite lower house prices, the interest rate hike has been bad news for first-time buyers this year. Zoopla estimates that there have been 15.5% fewer first time buyers in the past 12 months from September 2023.
But first-time buyers are said to be ‘needed’ to keep the market flowing and form the bottom of the housing chains.
Rightmove said that buyer demand in the typical first-time buyer sector (two-bedroom and fewer properties) is hardest hit compared to last year. Not only are first-time buyers having to assess their budget and the impact of higher mortgage rates, they also have their deposit to save up for amongst a wider affordability squeeze.
Agents report that there will likely need to be an even greater focus on securing first-time buyers for the bottom end of chains in 2024 to help build longer chains, create more sales, and keep transactions moving.
2023 trends
- First-time buyer related Google searches have halved in 2023 – with an estimated 15.5% decrease of first-time buyers purchasing a property in 2023
- The average time to sell a property in 2023 was 34 days – up from 25 days last year
- Three bed homes remain the most in demand property type this year
- Seven in 10 of the most viewed properties for sale in 2023 were sold for £350,000 and below reflecting the need to view realistic and affordable properties
- In 2024, Zoopla predicts that house price growth will remain negative with prices down 2%
2024 forecast
Zoopla experts say that housing affordability needs to improve to price more buyers back to the market and support more sales. UK house prices have fallen less than expected over 2023 but together with 5% mortgage rates, it means purchasing a property still remains relatively expensive for an average household.
To see a meaningful reset when it comes to affordability, house prices will need to fall further as incomes increase. Assuming mortgage rates drop to 4.5% by the end of 2024, Zoopla expects that.
Further reading
Purchases – Oakwood Property Solicitors
WHAT TO DO NEXT
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