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House Prices Rise Again, but Potential Drop Predicted Ahead

The UK housing market has recently experienced a notable uplift, with house prices rising by 1.1% in December 2023, marking the third consecutive monthly increase and a 1.7% rise throughout the year. According to Halifax, the average house price now stands at £287,105, an increase of £4,800 over the year. However, Halifax predicts a potential drop in house prices, ranging from 2% to 4% this year.

Northern Ireland exhibited the strongest annual growth, with a 4.1% increase, while the South East of England faced the most significant decline, dropping by 4.5%.

Sarah Coles, head of personal finance at Hargreaves Lansdown, commented on these trends: “December brought more good news for sellers, with prices up during the month, and the average property gaining £4,800 in a year. There’s good news on the way for the next few months too, as lower mortgage rates boost buyer enthusiasm. However, a tough 2024 could test buyers to breaking point, and prices may well fall over the year.”

Coles pointed out that despite a positive return in 2023, following a shortage of properties on the market, the reality for sellers is still challenging due to limited buyer presence and slow property movement. She added, “The good news is that falling mortgage rates could well inject a little more enthusiasm into the market.”

Nathan Emerson, CEO at Propertymark, responded to the Halifax House Price Index, saying, “It is positive to see that house prices have gone up gradually month on month and also year on year, especially as borrowing costs are being affected by higher interest rates on mortgage affordability.” Emerson also noted the Bank of England’s maintenance of interest rates, expressing hope for future rate cuts to stimulate the housing market.

Guy Gittins, CEO of Foxtons, remarked on the resilience of the UK property market: “The latest figures provide further proof that despite a tough year, the UK property market has seen 2023 out on the front foot.” He anticipates a better year ahead due to the stability from a freeze on interest rates.

Verona Frankish, CEO of Yopa, echoed similar sentiments, noting the positive direction of the market and expecting continued resilience in 2024. Marc von Grundherr, Director of Benham and Reeves, also acknowledged the market’s resilience, advising against predicting a fall in property values in the coming year.

Jonathan Samuels, CEO of Octane Capital, commented on the positive influence of the interest rate freeze, saying, “A freeze on interest rates has certainly helped to steady the ship… With the base rate remaining at its highest since 2008, we’re not yet out of the woods, but we can now see the light through the trees and it’s difficult to anticipate anything other than further positivity on the horizon in 2024.”