Residential housing in south London
In 2023, the number of sellers reducing their asking price surged to 39%, a notable increase from 29% the previous year and 34% in 2019 Reuters

The UK housing market is poised for a one per cent decline in average house prices in 2024, according to predictions by Rightmove.

Additionally, the forecast attributes this dip to heightened competition among sellers, necessitating more competitive pricing to attract buyers. Anticipating a landscape where sellers will need to adopt more competitive pricing strategies to secure buyers in 2024, Rightmove also foresees a stabilisation in mortgage rates, albeit at persistently high levels.

A year ago, Rightmove had predicted a two per cent drop in average asking prices for 2023. However, as of Monday, the company revealed that the average asking price was 1.3 per cent lower than in 2022. This decline persists due to the property market grappling with substantially elevated mortgage costs and an enduring cost of living crisis.

It's crucial to note that Rightmove records asking prices, not the final sale prices of properties. The platform predicts that these asking prices are likely to be approximately one per cent lower nationally by the close of 2024. This adjustment marks the market's gradual transition to what Rightmove terms as "more normal levels" of activity following the bustling post-pandemic period.

During 2023, the proportion of sellers reducing their asking prices surged to 39 per cent, a noticeable increase compared to 29 per cent the previous year and 34 per cent in 2019.

Tim Bannister, a property expert at Rightmove, commented on this, stating: "An average drop of 1 per cent in prices aligns with our forecast for another subdued and, in certain aspects, challenging year for buyers and sellers in 2024."

Bannister underlined the unexpected buoyancy in activity this year, highlighting that many buyers are actively pursuing their housing requirements, presenting a significant opportunity for sellers and agents who employ appropriate pricing strategies.

Nationwide Building Society reported a 0.2 per cent month-on-month increase in prices for November, following a 0.9 per cent rise in October and a 0.1 per cent uptick in September. Nevertheless, on a year-on-year basis, prices saw a 2 per cent decline in November.

Zoopla, a property website, recently indicated that the current market conditions offer the most advantageous circumstances for buyers since 2018, a period marked by Brexit uncertainty.

There's encouraging news for individuals considering remortgaging next year. Mortgage broker John Charcol predicted that rates on certain new fixed-mortgage deals might dip below 4 per cent by mid-2024. Rightmove noted a consistent decline in average mortgage rates since July, providing prospective movers with increased stability and certainty regarding the type and cost of mortgage offers they can expect.

Despite the positive shift in mortgage rate forecasts, Rightmove cautioned that affordability remains strained for many potential buyers. This cautionary note arises as the Bank of England signals that immediate cuts to its base rate are unlikely, indicating that borrowing costs are expected to persist at elevated levels throughout 2024, consequently limiting the spending power of some buyers.

In recent developments, UK house prices have seen a third consecutive monthly increase in November, responding to growing optimism around the peak of mortgage rate costs.

Nationwide reported a 0.2 per cent month-on-month rise in November, following increases of 0.9 per cent in October and 0.1 per cent in September. Economists polled by Reuters had anticipated a 0.4 per cent decrease in November prices. This marks the first instance of homeowners witnessing a three-month consecutive rise in property value since the summer of the previous year.

While prices remained 2 per cent lower in November on an annual basis, this signifies the most promising trend observed in nine months, following a 3.3 per cent year-on-year fall in October. The average price of a home stood at £258,557 in November, marking a £5,231 decrease compared to the same month the previous year.

Nationwide attributes the market's improvement to the belief that the Bank of England's decision to maintain the base interest rate at 5.25 per cent, following 14 consecutive increases, indicates an impending reduction in soaring mortgage costs, likely driving increased activity in the housing market.

The Bank of England's decision to retain the rate at 5.25 per cent for the second time in November, while still at a 15-year high, has contributed to lowering some two- and five-year fixed mortgage rates to below 5 per cent, down from their peak levels of over 6 per cent.

Last month's substantial drop in inflation from 6.7 per cent to 4.6 per cent has heightened hopes that the Bank of England might initiate rate cuts in the upcoming year.