Halifax January 2024 House Price Index

January on the whole was a busy month. New enquiries for mortgages from first-time buyers, home movers both rose strongly. If this level of activity continues, UK property prices have only one trajectory and that's up. This is especially the case with sought-after homes. With fixed mortgage rates all showing a general downward movement last month, with some interesting 5-year deals available, applicants who have a mortgage rate maturing during 2024 should be well placed to gain a good deal via their financial advisers. We are 50/50 on whether the Bank of England will cut the base rate in March's meeting, but if not a cut by the summer is now looking likely.

January was noticeably busier, with plenty of buyer interest after a quiet few months, particularly in the autumn. However, with uncertainty around when interest rates will be cut, existing borrowers facing huge jumps in their mortgage payments, and a stagnating economy, I believe house prices will continue to drift lower by around 5% this year. That's assuming the government don't try and 'intervene' in the March budget with some scheme like the reintroduction of Help to Buy or a stamp duty holiday. Both would be disastrous in my view, as they will just make property even more unaffordable.

Economists' predictions of a flat-lining property market in terms of values overall may prove to be right, but from what we're seeing there could end up being significant variations within it. Properties at the top end of the market are languishing on the market despite recent reductions in mortgage rates, but as rates are still a lot higher, potential "next-steppers" still seem cautious. However, at the lower end it looks like it could be a different story. We have been inundated with first-time buyer enquiries this month and, in echoes of 2022, multiple offers are going in on those starter homes, especially as some smaller landlords look to dispose properties from their portfolios.

In Scotland, December took a nap, but January burst into 2024, shattering any notions – and, in some cases, wishes – of a market slowdown. Mortgage enquiries across the board have been skyrocketing, signalling a definite resurgence in buyer confidence and interest. First-time buyers are the heartbeat, injecting life into the sub-£200k market in Scotland and, as they flourish, those higher up the ladder are also now cautiously exploring mortgage options, tiptoeing both up and down the property ladder. Barring unexpected geopolitical surprises, 2024 overall is shaping up to be another robust and positive year for the Scottish housing market. In contrast to the broader UK trend, Scotland maintained stability in 2023, witnessing modest gains in some areas. Only an improbable spike in the base rate, for whatever reason could potentially disrupt this sustainable pattern of annual house price growth.

With many major banks entering a mortgage price war throughout much of January, the anticipation of numerous base rate drops in 2024 is evident. Consensus seems to be inflation will keep dropping across the year so banks are factoring this in. January has clearly seen an uptick in enquiries compared to the fourth quarter of 2023, which suggests this confidence is trickling down to buyers. With opportunities for deals out there and rents having surged in 2023 there is a real appetite to buy. I would expect prices to remain relatively flat for the first half of the year and then increase as rates continue to drop.

This January, it's like someone's flipped a switch. We were absolutely swamped. There's a real hunger for property, which is no surprise given the amount of pent-up demand. With mortgage rates getting trimmed, it's full steam ahead. We're not just seeing the usual ‘new year, new me’ crowd either. There's a tangible shift in the air. If this pace keeps up, we're in for a bonkers February, too. Looking at house prices in 2024, if interest rates keep taking a dip, I reckon we'll see prices climbing. It's simple really: lower rates mean borrowers can get their hands on more cash, and that's like throwing fuel on the property market fire. When it comes to those coming off ultra-low fixed rates, sure, there'll be a bit of a shock to the system. But let's put it into perspective, it's not the end of the world. Those who opt for a 2-year fixed or tracker will see some pain over the short term, but they should find themselves in a decent spot when they switch to a new product next time round.