After the number of first-time buyers hit a record low in 2023, the UK housing market is set to stabilise in 2024. Given the uncertain economic climate, it has been hard to make clear predictions, but experts have identified trends for the coming year. We have gathered together some of the key predictions for where the housing market will go this year. 

What will house prices look like in the 2024 housing market?

Even though house prices have yet again gone up these past few months, the predictions for the new year are more positive for prospective buyers. Experts explain that house prices are likely to fall by 2% by the end of the year. Halifax even estimates that the fall in house prices in 2024 could reach 4%.

The reason for such a forecast is that ongoing inflation and high interest rates are decreasing affordability. As a result, fewer people are looking to buy which leads to lower asking prices.

Another element to take into account is that the General Election will take place this year. Since it has to happen before the end of January 2025, it is expected that the housing market will slow down in fall 2024. Since fewer buyers will be looking to purchase in such uncertain times, sellers may lower their prices.

What will mortgage rates look like in 2024?

This is probably one of the most difficult aspects of the housing market to predict. Mortgage rates remain high as we enter 2024. The Bank of England has yet to announce a cut to interest rates. However because experts predict that such a decision is coming, some lenders have already gone ahead and lowered their mortgage rates.

Because interest rates could drop towards the end 2024, buyers could benefit from more favourable conditions in 2025. Unfortunately, for the time being, affordability will be the number one issue facing first-time buyers in 2024. Considering the housing market for the coming year, a way to improve housing affordability will be to increase your wage.

One positive thing to note is that the number of mortgage products currently available is the highest it's ever been in the last 15 years. For example, the number of 5% deposit mortgage deals has increased by 6% from December 2023 to January 2024. The more choices there are, the better positioned you are to find the right mortgage for your situation

What will renting costs look like in 2024?

The time of declining rent prices seems like a distant memory. As of November 2023, the Index of Private Housing Rental Prices stated that private renting costs had increased by 6.2% in the last 12 months.

Unfortunately, the new year doesn't mark the end of the soaring rental costs as they are forecasted to keep increasing throughout the year. In fact, some experts predict that rents could go up by 6% in 2024.

Renters are facing a tricky situation as rents have gone up significantly, making it hard and in some cases impossible to save up for a deposit. If buying could result in cheaper monthly payments towards a mortgage, a lack of savings is preventing prospective buyers from stepping onto the property ladder.

Soaring interest rates and rental costs are straining buyers and renters' finances

What will the 2024 housing market be like in London?

You'll be surprised to hear that London again tops the list of the most expensive cities to buy a home in the UK. The average price for a home in London was £516,000 in October 2023 according to the UK House Index.

However, research led by Zoopla, finds that the level of asking price discounts has increased in London as well as in the home counties. Discounts can typically reach 6.1% which equates to about £30,000 for the average price of a London home.

If you can benefit from a boost from your parents an use the bank of mum and dad to buy a home, 2024 is the right time to take that step and break up with the world of renting. As the average London rent now reaches a record £2,627 per month, it is becoming more expensive to rent than to pay back mortgage payments in some cases without benefitting from the safety of homeownership.

What does the 2024 housing market mean for prospective first-time buyers?

Banks have been stress-testing buyers at higher mortgage rates than the current ones to ensure they can afford monthly payments even if the rates increase further. This means that the criteria to qualify for a mortgage have been harder to meet for many prospective first-time buyers. This has led to a sharp decline in first time buyers on the open market. 

To remedy this issue, alternative ways to buy a first home are a great avenue to explore. Buying schemes such as Shared Ownership and Rent to Buy, enable people with lower affordability to get onto the property ladder despite the obstacles present in the current housing market like the requirement for large deposits. 

Zoopla suggests, the 2nd largest group of buyers in 2024 will first-time buyers, as rents continue to rise, if they can be encouraged to be more flexible about location and utilise first time buyer schemes.