What will happen to Cheadle house prices in 2024?

It’s that time of year again, where we look back at property market nationally and locally in 2023 and look ahead to what’s in store for Cheadle home sellers, buyers, landlords and tenants in 2024.

2023 was certainly a turbulent one in the property industry, with interest rates reaching their highest in over a decade and therefore the cost of borrowing and people’s mortgage payments escalating significantly. This coming on top of the continuing cost of living crisis, forced many prospective buyers, especially first-time buyers to shelve their plans to buy a home and as a result there will likely be around 1 million house sales completed by the end of the year, which is down 23% on the previous year.

There was also much talk, speculation and in some cases utter hysteria amongst so called property market experts and commentators, suggesting Armageddon for property prices with claims that prices would drop 25 to 35%, which haven’t materialized and prices, in particular in SK8 and SK3 have remained extremely resilient. So, let’s go – here is our take on prices and what will happen in the house market in 2024.

1. House prices may drop – but no need to panic

Fears of a house price crash in 2023 didn’t come to pass, with average prices dropping by around 1%-2%. The caveat we need to add here is that all property indices use different data points and the one on which we place most store the Land Registry figures which show what properties actually sold for is anything up to six months behind, so the likelihood is the figure is a little higher than this. We won’t really know until probably April/May 2024. The picture also doesn’t look quite so rosy when you factor in inflation. The large London estate agency Savills recently said that prices had dropped in real terms 13.4% since their peak in March 2022.

In a recent poll conducted by Finder, 55% of property and economic experts forecasted that house prices would drop by between 5% and 7.5% by autumn 2024.

Of course, predicting prices is a bit of crap shoot! Last year lenders the Nationwide and Halifax predicted prices would drop 5% and 8% respectively. This year they are being much more cautious suggesting prices in 2024 will drop between 0-2% and 2% -4% . The property portals Rightmove and Zoopla predicted a 2% and 5% drop in 2023 and for 2024 are predicting a 1% and 2% drop. Interestingly all the major players are still suggesting prices won’t do much in 2024.

The property market is very localized, so the truth is that any of these outcomes could happen in your area, however judging on what happened in SK8 and SK3 in 2023, we remain confident that the there will not be a major slump in prices and demand will start to pick up.

But, while falling house prices might make for dramatic headlines, it’s important to put these predictions in context.

Land Registry data shows that even a drop of 7.5% in the UK average house price would only take it back to where it was two years ago, in January 2022.

2. Mortgage rates will fall slowly

Mortgage rates skyrocketed after the government’s ill-fated Autumn Statement in late 2022, and the impact is still being felt.

Average rates have now dropped back to below 6% – a small crumb of comfort for borrowers after a difficult year.

Rates are likely to fall further in 2024, with signs indicating that inflation has passed its peak and that the Bank of England may eventually start lowering the base rate.

Unfortunately, though, the cost of borrowing is likely to drop much more slowly than it rose.

If you’re looking to buy a home in 2024, think carefully about how long you fix your mortgage rate. Five-year fixes are currently priced most competitively, but if rates fall more quickly than anticipated, you may end up locking yourself out of the biggest savings. Make sure you take advice from an independent mortgage broker before you do anything else.

3. First-time buyers will borrow for longer

It’s been tough being a first-time buyer in 2023. After years of chasing rising property prices, people trying to get on the ladder now have to contend with sky-high mortgage rates.

Recent data shows the number of people taking out mortgage terms lasting 35 years or longer more than doubled between 2018 and 2022 and, with affordability squeezed, this trend is likely to continue.

40-year ‘marathon’ mortgages have theoretically been on the market for a long time, but very few deals were actually granted with these maximum terms.

That could change in 2024. We’ve already seen Halifax increase its maximum borrowing age from 70 to 75, and it’s likely that other lenders will follow suit.

4 It will still be a buyers’ market, but sales will rise

The property market has slowed recently, with sales down nationally, 17% year-on-year and properties now taking much longer to go under offer. In SK8 and SK3 combined there were 1219 sales in 2023, compared with 1583 in 2022 – a drop of 23%

This means sellers going to market in 2024 will still need to be realistic about how much they’re likely to get, especially as the number of “forced sellers” hit the market, as their spiraling mortgage costs hit as their current fixed rate deals come to an end in 2024 – there are an estimate 1.6m of them!

Rightmove says it expects a rise in the number of homes coming on to the market in 2024, and Halifax predicts a ‘partial recovery’ in sale volumes.

Three consecutive holds in the Bank of England may provide increased confidence that mortgage rates won’t spiral, encouraging buyers who’d been biding their time to make a move.

And if, as is speculated, the base rate begins to drop in the second half of the year, this could result in more mortgage applications and higher sales numbers.

5. First-time buyer schemes and incentives will return

The closure of the Help to Buy scheme in March was met with mixed reactions, but it has left a big hole in the market.

Overall, 328,000 first-time buyers used Help to Buy to get on the property ladder between 2013 and 2023.

The first homes scheme, originally announced in 2021, promised discounts of up to 30% for first-time buyers, but is yet to fully get off the ground.

With an election possibly on the horizon, it wouldn’t be a surprise if a crowd-pleasing first-time buyer scheme appeared in 2024, most likely to be announced in the upcoming budget which has just been set for March 6th 2024. Also, look out for reforms to inheritance tax, as the government tries to win back disenchanted supporters.

6. We’ll finally see leasehold reforms

The saga around leasehold reform has been going on for some time.

The good news is that the Leasehold and Freehold Reform Bill has finally started its progression through Parliament.

The first reforms – which include banning the sale of almost all leasehold houses, introducing longer lease terms and making it cheaper to extend leases – should come into force in 2024. A consultation on capping existing ground rents is ongoing. We are not sure any of these reforms go far enough and it remains to be seen what, if any effect it has on the property market or property prices.

7. Rents will continue to rise

The cost of renting soared in 2023. Data from the Office for National Statistics shows that monthly rents were 7% higher in November 2023 than in November 2022. In SK8 we saw rents increase by 10% year on year and in SK3, they rose 8%

Unfortunately for struggling tenants, rents may be set to rise further. The continuous shortage of available rental stock will likely keep pressure up on rents, especially as The Renters Reform Bill, higher but to let mortgage costs and increased tax burden on Landlords forces an increasing number out of the sector or to pass on these extra costs in the form of rent increases.

8. The Renters Reform Bill will come into force

The long-awaited Renters Reform Bill is making its way through parliament, with hopes it could come into force by the end of 2024.
The headline change – a ban on no fault evictions under Section 21 – has been delayed. The government says this is due to the need to put a new legal system in place.

However, measures regulating rent increases, stopping discrimination against potential tenants on benefits, the right to keep pets, and a new ombudsman to resolve disputes are still being brought forward. Whilst we applaud any measures that improves fairness, increasing regulation and legislation will force a number of landlords to reconsider whether it is worth continuing in the sector.

So, there we have it, our look ahead to 2024. In conclusion we don’t anticipate any great change up or down in house prices in the SK8 and SK3 area but expect to see more people selling and therefore an increase in the number of sales. It remains to be seen what impact a general election might have, as historically people don’t like change and many sellers and buyers may elect to see what happens with the election and the next governments plans for the economy and property market. We see rents continuing to rise and there remaining a shortage of good quality rental stock, certainly in the short to mid-term.

If you are thinking of selling or letting a property in 2024 and would like to discuss how the value of your property has changed and learn about our proven strategy designed to help achieve the best possible price or rent, within your preferred time scales, please contact Joe, Patrick or Maurice on 0161 428 3663, e-mail sales@mkiea.co.uk or visit our website and book a Free marketing advice meeting online at a time that is most convenient for you BOOK A FREE VALUATION