House prices increased for the third month in a row, according to Nationwide, raising hopes of an improvement in the property market in 2024.
The average UK house price inched up by 0.2% in November compared to a 0.9% monthly change in October. Over the last year house prices have fallen in price by 2%.
Nationwide said whilst annual growth was ‘weak’ it’s still the strongest since February 2023.
It comes at the end of a week which saw further rate cuts to mortgages for homebuyers – including some ‘stand out’ pricing from Barclays.
Not only did the lender unveil a 4.39% rate on a five-year fix for borrowers buying a home with a healthy deposit but they also announced a sub-5% rate on a deal for buyers with a 10% deposit.
These competitive rates were welcomed warmly by brokers who said price cuts of this nature would help fuel the property market.
Michelle Lawson, director at Fareham-based broker, Lawson Financial who was speaking via the Newspage agency, said: “It’s great to see rates come down further and this should give borrowers much more confidence as we enter 2024.
“After a disastrous 12 to 18 months for the industry, it is always nice to see a glimmer of hope and, as we start think about what 2024 holds, let’s hope this continues.”
It’s also good news for first-time buyers who are starting to see some benefits from the price cuts.
Ranald Mitchell, director at Norwich-based broker, Charwin Private Clients, also speaking through the Newspage agency said: “Lender focus on higher loan-to-value products will eventually kick-start the first-time buyer and home mover corners of the market.”
He added: “This price war is going to continue and, dare I say it, 2024 is shaping up nicely for the property market.”
What will happen to interest rates and house prices in 2024?
Interest rates have been held at 5.25% on two occasions and forecasts now suggest they have now hit their peak. This could have an impact on what happens to property prices going forward.
Robert Gardner, Nationwide’s chief economist, said: “There has been a significant change in market expectations for the future path of Bank Rate in recent months which, if sustained, could provide much needed support for housing market activity.
“In mid-August, investors had expected the Bank of England to raise rates to a peak of around 6% and lower them only modestly (to c.4%) over the next five years. By the end of November, this had shifted to a view that rates have now peaked (at 5.25%) and that they will be lowered to around 3.5% in the years ahead.
“These shifts are important as they have led to a decline in the longer-term interest rates (swap rates) that underpin fixed rate mortgage pricing.
“If sustained, this will help to ease the affordability pressures that have been stifling housing market activity in recent quarters.”
He added: “While mortgage rates are unlikely to return to the lows prevailing in the aftermath of the pandemic, modestly lower borrowing costs, together with solid rates of income growth and weak/negative house price growth, should help underpin a modest rise in activity in the quarters ahead.”
Still, today’s data from Nationwide should offer some optimism to those who are hoping 2024 will be less challenging than this year.
Karen Noye, mortgage expert at Quilter, said: “The latest UK house price figures paints a picture of a market cautiously tiptoeing towards some semblance of stability.”
She added: “This slight uptick on the meteorological first day of winter is like a green shoot of recovery for the housing market hinting at potential growth amidst challenging conditions.”
But she said homeowners and would-be buyer should remain cautiously optimistic. “The broader picture remains one of caution,” Noye said. “The balance of recovery will hinge on how interest rates and the broader economic picture evolve in the coming months.”
