H2 2024 Residential Market Update

Written by Alex Jervis, Senior Development Manager

Over the past two years, the UK housing market has faced challenges characterised by notably low transaction volumes, build cost inflation, and increased interest and mortgage rates. Despite economic uncertainties, house prices have remained stable.

However, this price stability has not translated into increased market activity, as transaction levels have remained incredibly subdued. In fact, monthly transactions in September 2024 were 42% below the pre-2020 five year average.

As interest rates increased rapidly, most analysts expected house prices to fall, but as the graph below shows house prices have remained robust, but transactions have plummeted.

Sources: HM Land Registry, House Prices, November 2024, HM Land Registry, Sales Volume, September 2024, Bank of England Database, Monthly average of UK resident banks' sterling weighted average interest rate, loans secured on dwellings, new advances to Individuals and individual trusts- November 2024

While geopolitical challenges and economic uncertainties remain, there is cautious optimism for the UK housing market in 2025. For example, Capital Economics forecasts the Base Rate will fall from 4.5% now to 3.5% in early 2026, which they expect to stimulate buyer activity, leading house prices to rise by around 3.5% this year, and by 4.5% next year.