Property News - Are House prices falling in February

Published: 06/03/2024 By Alistair Wiltshire

Are UK house prices falling in February 2024?
According to Zoopla UK house prices have fallen -0.5% in the last year, bringing the average UK house price to £263,600 this month. Here’s whether house prices are rising or falling in your region, city or local area in February 2024.

Key takeaways
  • The average UK house price is now £263,600, which is £1,210 lower than a year ago
  • House prices are falling at a rate of -0.5% - lower than in recent months as the market steadies and mortgage rates settle at between 4% and 5%
  • Five regions across the south of England are seeing the largest house price falls with Southampton, Bournemouth and Portsmouth leading the way at a local level
  • Wales, Scotland, Northern Ireland and four northern English regions are seeing property prices rise once more
  • Average prices are now -1.5% below the house price peak in October 2022
Zoopla House Price Index, which measures the rise and fall of house prices across the UK, has tracked a -0.5% annual fall in house prices in February 2024.
The average UK house price is now £263,600, which is £1,210 lower than a year ago and in line with last month.
However, the pace of house price falls across the UK is now slowing as the number of sales and level of buyer interest have picked up. The housing market is rebalancing as mortgage rates stabilise between 4% and 5%.

Why are UK house prices falling?
  • Higher interest rates on mortgages have made it harder for people to buy a home: you need to prove you can afford more, have a greater deposit and have a higher monthly income.
  • This has reduced buyer demand across the property market ever since the mini-budget in October 2022 when rate increases accelerated, and there are also many more homes on the market than in recent years.
  • These factors together create a buyers’ market - when buyers have more choice so sellers are under pressure to price more competitively. This causes property prices to remain flat or fall.

Will house prices keep falling in 2024?
  • It depends where in the country you live as the trends vary by area based on the overall affordability of homes and the level of house prices in each property market. The rate of falls will continue to slow.  
  • We don’t think house prices will start rising more quickly over 2024 and they are likely to broadly track sideways at current levels.
  • It’s still a buyers market and there are many more homes for sale boosting choice for buyers. Higher interest rates on mortgages have reduced buying power compared to recent years and buyers remain price sensitive and focused on value for money.
  • The recent decline in mortgage rates has boosted activity but rates appear unlikely to fall much further. At the same time half of those with a mortgage have yet to move onto a higher rate which will keep buying power in check for those looking to move.
  • For those looking to move, the positive news is more active buyers in the market which will boost the chances of agreeing a sale more than pushing prices higher over 2024.

Why didn’t house prices fall further in 2023?
  • History suggests that mortgage rates rising from 2% to 5%+ would have led to larger house price falls than those we recorded in 2023.
  • But there are several reasons to explain the more modest falls.
  • The strength of the labour market and high growth in average earnings are important factors. Lenders’ forbearance policies are supporting households struggling with repayments, which has limited the number of forced sellers.
  • Perhaps most important is the tougher mortgage affordability testing for new borrowers since 2015. The new regulations were designed to stop households taking on excessive debt and artificially inflating house prices.
  • This has prevented a major housing overvaluation and made sure that most households can manage the transition to higher mortgage rates, although we are yet to see half of homeowners do that.

Please don’t hesitate to contact your local office to discuss the market or what the shift has done to the value of your property.
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