Average new seller asking UK prices will slip by 1% by the end of 2024, “as the market continues its transition to more normal levels of activity following the frenetic post-pandemic period,” says Rightmove.
The property website says sellers are likely to have to price more competitively to find buyers next year, while agents “will work even harder to build chains, especially at the bottom end where first-time buyer affordability will remain stretched”.
Mortgage rates “will settle but remain elevated”, tempering some buyer’s budgets, especially in the lower and middle market sectors, the firm says, using data from its portal alongside forecasts from estate agents and its in-house panel of experts.
The average two-year fixed residential mortgage rate fell by a single basis point to 6.03% today, from Friday, according to Moneyfacts.
While average five-year fixed residential mortgage rate fell by a single basis point to 5.64% over the same period.
Rightmove adds: “While the outlook for mortgage rates has improved and there are signs that the Bank of England base rate has peaked, affordability remains stretched for many buyers.
“With the bank signalling that any base rate cuts are not imminent and are likely to remain elevated during 2024, some buyer’s spending power will remain limited.”
The level of price reductions lifted this year, with 39% of properties now seeing a price reduction during marketing compared to 29% in 2022, and 34% in 2019.
Rightmove says: “The average time for a seller to find a buyer has jumped from 45 days this time last year to 66 days now, with those sellers who have been competitive on price able to find a buyer more quickly.
“We expect that those sellers who have a more pressing need to attract a buyer will continue to price below their competition into 2024, and to be joined by sellers who have taken longer to adjust to the softer market conditions and belatedly get up to speed.”
The portal points out: “Buyers are much more likely to see a choice of homes for sale in their area that suits their needs compared to the stock-starved pandemic years.
“Buyers coming to market in 2024 are in a strong position to negotiate on price and take more time to choose the home that’s right for them.
It adds: “However, the number of available homes for sale has only just increased to pre-pandemic levels and there are no signs of a wave of new listings which would create a glut of homes for sale.
“With more choice and fewer buyers on the ground, it will be those sellers who are willing and able to price temptingly who will attract buyer’s attention.”
Rightmove’s property expert Tim Bannister says: “This year has been better than many predicted, with no significant signs of forced sellers, lower than expected price falls, and good buyer demand for the right-priced quality properties.
“We predict a modest average fall of 1% in new seller asking prices next year. This will be felt more keenly in some areas of Great Britain than others. The housing market is made up of thousands of local markets, each with its own unique dynamic of supply and demand.
“In areas with more discretionary sellers and fewer homes for sale, we may see new seller asking prices remain flat, or even very slightly increase compared to this year.
“An average drop of 1% in prices reflects our prediction that it’s likely to be another muted, and in parts challenging, year for some buyers and sellers in 2024.”
The website points out that a year ago, it predicted average new seller asking prices would drop by 2% in 2023, and they are currently 1.3% lower year-on-year.
Jeremy Leaf, north London estate agent and a former Rics residential chairman, says: “This forecast is quite encouraging bearing in mind that Rightmove looks as asking, rather than selling, prices.
“Such a modest change is unlikely to have much bearing on buyers’ intentions one way or the other. Certainly, we have seen over the last month or two that activity has remained fairly consistent despite rocketing interest and inflation rates.
Leaf adds: “With mortgage payments and the cost of living starting to fall, while wage rises are more than holding their own, this is giving buyers confidence that we are at, or very close to, the bottom and prices are unlikely to change dramatically in the short term at least.
“Looking forward, we don’t expect any significant changes as so many homeowners will have to deal with fixed-rate mortgages coming to an end next year, which will inevitably prevent many from making a move.”
