Estate agency, Savills, suggests that while UK house prices are predicted to fall by an average of 3% in 2024, there’s a silver lining for prospective homebuyers.
As we edged closer to Christmas, it became evident to housing market analysts that mortgage affordability was taking a toll on house prices. Savills now forecasts this trend to persist into 2024. However, it’s not all gloom and doom. The agency observes signs of growing buyer confidence, buoyed by falling mortgage rates.
Buyers Show Renewed Enthusiasm
Savills’ recent survey, encompassing over 1,400 prospective buyers and sellers, reveals a trend. There’s a newfound eagerness to move homes, the strongest in over a year. A striking 30% of respondents indicated a heightened commitment to moving within the next six months, a significant leap from just 14% in July 2023.
This surge in enthusiasm is especially pronounced among those reliant on mortgages. Thanks to declining mortgage rates, these buyers now face the prospect of locking in lower borrowing costs.
The Driving Forces Behind the Decision to Move
When quizzed about their motivations to move in 2024, a majority of respondents (57%) expressed a desire to “just get on with life.” Around 31% believe that affordability has improved or that house prices are bottoming out. An additional 12% prefer investing in property over other options.
Frances McDonald, a research analyst at Savills, notes that these findings align with the latest RICS data, indicating the strongest new buyer enquiries since April 2022 – “Most prospective buyers are also not in a position in which they feel they need to alter their budget. When asked if the amount they are looking to spend has changed compared with three months ago just 14% said they were reducing budgets, while almost as many people were looking to spend more. Almost one in eight are fortunate enough to be in a position to reduce borrowing without affecting their budget, and instead plan to increase the use of cash or equity. According to our research, cash purchasers made up 43% of transactions in 2023, far higher than the 35% recorded before the pandemic.”
Varied Motivations Across Buyer Categories
The survey highlights diverse reasons among different buyer groups:
- First-time buyers: 32% have finally saved enough for a deposit, while 26% find owning more appealing than renting.
- Downsizers: 47% find their current homes too large, 15% wish to release equity for retirement, and 12% seek proximity to amenities and transport.
A Mixed Outlook for Different Market Segments
While the average UK house price is expected to dip by just 3%, the recovery rates vary across market segments:
- Prime markets (top 5-10% by value) are set for a quicker recovery due to lesser borrowing dependence.
- Prime central London anticipates no price falls.
- Prime regional markets, which thrived during the pandemic, might see a marginal decline of 1.5%.