Halifax December 23 House Price Index - reaction

December saw a renaissance in the property market. It literally went from the dark ages to modernity in just one short month. Lenders were proactive in cutting rates, and people have now adjusted to the new normal and accepted rates as they are. It sounds dramatic but it genuinely felt like the market was reborn last month, and this month, based on the activity levels we're seeing, is definitely following suit. I am full of optimism for the coming year and I think we may see a buying frenzy similar to post-Covid as there is an awful lot of pent-up demand.

I'm going to throw it out there. I think house prices will marginally increase this year, despite the Halifax forecasting a fall of between -2% and -4% in 2024. We still have a shortage of housing that's not going away and with mortgage rates looking more affordable, demand will increase. Front-end activity is brisk, and I don't think we've ever had more enquiries between Christmas and the New Year. We're less than a week into 2024 and it's already a blinder.

Lenders are quickly adjusting rates in response to falling inflation and expectations of a rate cut. It might take a bit, but we're optimistic that potential movers will start feeling hopeful again. And there's the upcoming Budget, which might throw in some extra perks and add to the positive vibes. December saw a fresh wave of interest from buyers. Lower mortgage rates seem to be the driving force behind this renewed enthusiasm. Many buyers, holding off in the summer and early autumn due to high rates, are finally making their moves now.

December saw renewed buyer interest, no doubt encouraged by lower mortgage rates. Many potential buyers held off in the autumn as rates were so high. Some of that demand is coming through now. Assuming any recession is only mild, and perhaps over by the summer, I expect house prices to fall gently this year, perhaps by 5%. But if the economy truly tanks and people start losing their jobs, 10% or more is possible.

The property market is showing promising signs of recovery. We expect to see homeowners more confident and looking to step up the ladder in 2024, which will release a good amount of quality stock for the bottom end of the market. This is likely to bring further increases in prices. With mortgage rates on a seemingly inexorable downward trend and the markets expecting a base rate cut in the near term, greater transaction volumes will assist the upward trajectory of prices this year on. We are seeing a fair amount of Shared Ownership transactions now that the bones of Help to Buy have rightly been laid to rest.

Demand for property is strong as the window shoppers and voyeurs drop out of the market with only serious, qualified buyers left. House prices will remain turbulent as the supply of ex-buy-to-let properties continues to flow. The trajectory of house prices will be governed by qualified demand. Demand always outstrips supply but stricter affordability criteria among lenders has created a bottleneck in demand. As soon as the blockage is released either by rates dropping further or the introduction of a Government-backed guarantee scheme, activity levels will pick up in earnest. Every buyer has their maximum and every seller has a bottom line number they can't go below. Everything in between is just negotiation. The key theme in the housing market is always that we don't have anywhere near enough good quality housing available to meet the needs of an ever-growing and ageing population.