As a result of inflation and the chaos unleashed by Liz Truss’ mini-budget, many were expecting 2023 to be a challenging year for the housing market. With mortgage costs soaring, quite a few commentators were even forecasting double-digit falls in house prices. However, in the event, the housing market bucked all expectations and there were signs, as of early January, that the housing market would hold steady. Inflation, on the other hand, proved more stubborn than expected. The interest rates, instead of peaking at 4.5%, went on to hit 5.25% and were forecasted, at one point, to reach 6.5%.

Activity, unsurprisingly, was subdued and by the summer, the rising cost of living was generating a wave of strikes and there were fears the economy would suffer. In the housing market, prices fell, but not by much, as many buyers, especially second-steppers, decided to sit tight and wait for mortgage rates to come down. Fortunately, high levels of employment meant that few were forced sales, although ever-rising rents ensured that first-time buyers were the most active in the market.

In August, the base rate climbed to 5.25% but was finally looking like it might have reached its peak. It took buyers several more months to be convinced it wasn’t a temporary blip, but with mortgage costs falling, confidence grew. By November, prices were at last on the move, although sales volumes were low and the market remained highly price-sensitive.

House prices ended the year down but, according to most of the indices, only 1% to 2%. It was the more affordable areas and homes which fared best, with the most expensive areas – the Southeast (-4.5%) and London (-2.3%) – seeing the biggest falls. In contrast, the price of homes in the Northwest rose by 0.3% and in Yorkshire and Humber they were up by 0.1% (source: Halifax). Transaction levels, though, were down by nearly 21% (1m) compared to their long-term average of 1.26m (source: Halifax).

So, what is everyone expecting the housing market to do in 2024? Although the base rate is unlikely to go down until the latter half of 2024, lenders have been busy slashing their rates. The best five-year deals are now under 4% and are expected to fall further, providing a major boost for the housing market. Despite the improvements in borrowing costs, mortgages are still some way above the levels we have become used to. So, in many areas, affordability remains stretched. Most commentators are therefore expecting the market to remain somewhat challenging, with house prices either stagnant or falling slightly, and a return to growth in 2025. There is also an election to factor into this year. They don’t, however, tend to have a huge impact on the market. Historically, there’s nothing more than a slight slowdown just before and just after.

2023: the facts

Nationwide: Dec 22 to Dec 23: National £257,443 -1.8%. London £515,132 -3.8%
Halifax: Dec 22 to Dec 23: National £287,105 +1.7%.
Land registry: Oct 22 to Oct 23: National £287,782 -1.2%. London £516,285 -3.6%
Zoopla: Nov 22 to Nov 23: National £264,500 -1.1%. London £515,504-1.5%
Rightmove: Dec 22 to Dec 23: National £355,177 -1.1%. London £667,019 +0.1% (asking prices).

The predictions

Please note – where possible, comparative figures for 2023 are from the company’s own indices.

Nationwide

Last year, Nationwide said there was likely to be a modest decline of around -5% against a final figure of -1.8%. In 2024, they are expecting the market to remain broadly flat at between 0% and -2%.

Halifax
Halifax’s 2023 prediction of an 8% fall was a long way off their final figure of a rise of 1.7%. This year, they expect prices to fall between 1% and 2%.

Zoopla
In 2023, Zoopla predicted prices would dip by 5%. In the event, their own figures show a fall of just 1.1%. This year they are forecasting prices to come down by a more modest 2%.

Rightmove
At just 2%, Rightmove were expecting one of the smallest falls in 2023, but even that was a little on the pessimistic side – their index ending the year at -1.1%. This year, they have reduced their expected fall to just 1%.

Some other predictions
CBRE forecasted house prices would fall 4.5% by the end of 2023. This year, with the outlook improving, they are expecting a far smaller fall of 0.9%.
Capital Economics were one of the gloomiest last year in their prediction of a 12% fall in house prices. They are considerably more optimistic about 2024, expecting prices to dip by just 1.5%.