Data from several different sources shows that house prices in the UK are falling. Most notably, Nationwide saw a 5.3% year on year drop in September. Halifax saw a 4.7% decline in the same period. We want to have a look at the situation, causes, and forecasts for 2024. Then if you need help with guaranteed rent in London, you can speak to us.

Why is it happening?

Experts have been bracing for a drop in house prices for months. It is now coming to fruition after a slower summer.

A number of different factors are influencing the dip in prices. Firstly is the fact that increases in interest rates means mortgages are far more expensive. To put that into perspective, in 2021 the average rate for a two year fixed mortgage was just 2.3%. Today it is a whopping 6.34%. That makes buying unaffordable for many people. In turn it cools demand and pulls prices down.

The high cost of living is also having a big impact. People are now spending far more on their monthly bills because of rises in energy and food prices. Wages have not risen enough to counter this. As a result, a lot of people can’t afford to buy a home.

Some experts are pointing to holidays as another reason for a drop in demand. The pandemic meant most people missed out on going on holiday for two or three years. So, more people have been getting away this summer. Again this meant the market cooled.

Finally, it could simply be a case that house prices had become so high that a drop was unavoidable. According to Nationwide data, the average UK home is 3x more expensive than what it was a century ago. In the last decade alone it has grown 60%. That, plus the high cost of borrowing, makes home ownership impossible for many people.

What could happen?

Whether you are an investor looking at guaranteed rent in London or are looking to see if you can buy in the future, it is important to consider what could happen to house prices.

A number of experts are predicting prices to continue falling in 2024. For example, Lloyds Bank has forecast a 2.4% dip. Zoopla are a little more optimistic, expecting a 2% fall. Knight Frank on the other hand are predicting worse, anticipating a 5% decline.

However, the dip may not occur or be as bad as the experts are predicting. There has already been one ray of sunlight because the Bank of England has chosen not to increase interest rates again. They have held the Base Rate at 5.25%.

There is also a belief that a full market crash is unlikely. The expectation is that mortgage rates will come down gradually. As they do, buyers will return to the market. Plus, supply is still lacking so even lower demand levels are higher than supplies.

Do you want the best guaranteed rent in London?

While prices were down in every region of the UK in the third quarter of 2023 according to Nationwide, there were some regional variances. Northern Ireland had the smallest dip at just 1.8%. London was next with 3.8%. Scotland and England has the next two places with 4.2% and 4.5% respectively. Finally, Wales had the biggest drop with 5.4%.

The cooling of prices in London in particular could be a positive for investors. It means they could snap up a bargain, especially because many sellers are willing to reduce their asking prices. You can then get the assurances of guaranteed rent in London to make it an even better deal.

If you do buy and want to look at rent guarantees, you can speak to us.