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UK house prices rise for 2nd month – how does this impact buyers?

With UK house prices increasing for two consecutive months, find out how this could affect you if you are thinking of buying a house in 2024?

A photo of Grace Lynch, the author

By Grace Lynch

Published on: 18 December 2023

5 min read

UK house prices rise for 2nd month in a row

It’s been difficult for consumers to keep track of the UK housing market during 2023, with rises and falls in both pricing and interest rates keeping UK buyers on their toes. Recent reports have indicated that house prices rose in the last 2 months – with an increase of 1.2% in October and 0.5% in November.

If I was thinking of buying or selling a property within the next year, I know I would understandably have some questions about how these price increases would affect me. The good news for buyers is that while prices have increased in the last couple of months, they have dropped overall this year (1% decrease).

It is also expected that UK house prices will fall in 2024, so buyers just need to hold out a little longer if they’re looking for a bargain price. This will depend on where in the UK you live though, so it’s a good idea to look at average prices for your local area to help you work out how much you could expect to spend.

QUICK SUMMARY – UK house prices rise for second month – how does this impact buyers?

Here are the main points that will be helpful to know if you were planning to buy (or sell) a house in the UK in 2024.

  • While house prices have risen consistently over the last two months, they have decreased overall by 1% (year on year)
  • The average cost of a home in the UK is now £283,615 – so you may need to budget more than you though depending on where in the UK you want to buy
  • House prices have risen the most in Northern Ireland, with an increase of 2.3% this year
  • If you’re thinking of buying in Wales soon, you may be able to get a bargain as prices fell annually by 1.5% for Welsh buyers

Experts believe that the increases in housing prices is mainly due to the shortage of housing available in the UK at the moment. Basically, people are willing to pay more than they may have in the past, as the wider range of options simply aren’t available now.

Kim Kinnaird (Director of Halifax Mortgages) spoke on this in the latest Halifax House Price Index and stated ‘The resilience seen in house prices during 2023 continues to be underpinned by a shortage of properties available, rather than any significant strengthening of buyer demand. That said, recent figures for mortgage approvals suggest a slight uptick in activity levels, which is likely as a result of an improving picture on affordability for homebuyers.’

While this is good news for the UK housing market overall, it’s frustrating to see the continuing impact of the shortfall in UK housing options. With modest increases in average house prices and the skyrockets costs of private rentals, many people in the UK are struggling to find a suitable and affordable home for themselves or their families.

Generally speaking, higher house prices can be good news for the UK economy. A sharp drop in prices (or a ‘market crash’) would indicate that the economy is in serious trouble. With the high rates of inflation this year and an ongoing cost of living crisis, many people (even us here at MPO!) worried that a potential market crash was looming.

Luckily, this doesn’t seem to be the case now, as house prices aren’t sharply moving in one direction or the other and inflation is slowly but surely decreasing.

A quick way to check how much house prices are rising (or falling) at any time is to look online at a house price index. House price indices can give a simple indication of any recent changes to the UK housing market including the current average house prices.

There are several house price indexes available to view online and sometimes the information can vary, so it may be worth looking at more than one. Some of the most popular choices are:

Note: There can be some more in depth and complicated insights included in these reports, so don’t worry if you don’t understand everything being said. You can just focus on looking at pricing figures if this is the information you are most interested in.

As you might expect, higher prices are great news for people who are thinking of selling. If you sell while prices are higher, you can stand to make more money from your sale – which is all anyone really wants.

I’d say you should get your property on the market soon though if you want to benefit from a higher profit. Though prices have increased month on month, it’s believed house prices will drop over the course of 2024 before rising again the following year.

Higher prices can make it trickier for buyers to get the house they are looking for, as they may have to stretch their budget a little further than they imagined.

Here’s some of our top tips for things you should think about that could be helpful if you’re considering buying a house next year:

  • Always add a little extra to your intended budget: There’s so much more that goes into buying a house than most people think and certain things like surveying costs and Stamp Duty Land Tax will cost you. Have a rough idea of how much money you may need, but definitely have a bit extra added on top as a financial cushion just in case.
  • Use sites like Zoopla to give you an indication of prices: If you know what area you’d like to live in, you can look on websites like Zoopla or Rightmove to give you a rough idea of how much the type of house you want could cost.
  • Shop around for the best mortgage rates: It’s better to spend some additional time looking for the right mortgage, than agree to a rate that’s not realistically affordable for you. Comparing what a few different mortgage lenders could offer might allow you to save significantly on your monthly mortgage costs.

I’d say anyone who has been considering an upgrade for their home or trying to get their foot on the property ladder could definitely benefit from buying in 2024. Though house prices have risen in the last couple of months, it’s widely believed that prices will drop in 2024.

While reports are varying over just how much prices will fall next year, the figures published from sources like Lloyds Banking Group, Financial Times and The Evening Standard are consistently stating an at least 3% – 4% drop in pricing.

Many economists and economic websites like Forbes have been worried this year about a housing market crash – but this didn’t happen.

However, it is looking likely that house prices will decrease gradually over 2024. Savills has predicted that property prices will fall by around 3% in 2024, before levelling out with a 3.5% increase in 2025.

So, while there isn’t a housing crash on the horizon, it’s looking like 2024 might be a great year to buy. This is particularly true for first time buyers who are looking for a good deal to take their first steps onto the housing ladder.

However, it’s always worth getting some advice before jumping headfirst into buying a new home or investment property. It can be useful to talk to an independent mortgage broker before making any decisions, as they can make sure you get the right mortgage and the best available rates.

More mortgage news and guides

Here is more of the latest mortgage news that might impact you if you are considering buying (or selling) a home in the UK.

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