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Why now is the best time to buy a house

New House Sold, Subject to Contract sign, with a New Home key fob, on a plan of properties with the new property highlighted.
New House Sold, Subject to Contract sign, with a New Home key fob, on a plan of properties with the new property highlighted.

The past 18 months have been a turbulent time in the property market, buffeted by rising mortgage rates, a drop in transactions and a lack of homes coming up for sale.

Now, however, a sense of optimism is returning, due to cheaper mortgage rates, a more stable-looking economy and greater optimism from the public about their finances.

Property analysts, estate agents and economists believe that this is a buyer’s market, with activity, sales and prices all recovering faster than expected since the start of 2024.

Some experts have suggested that now may be the time to buy, as house price falls have bottomed out – and values may soon rise again.

What is happening to house prices?

House prices fell by 1.8pc over 2023, according to lender Nationwide, and dropped by a total of 6pc between the peak of the market in August 2022 and December 2023. This was a much smaller drop than many analysts had been expecting, with some having forecast falls of as much as 30pc from peak to trough.

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More recent data from Nationwide for the first three months of 2024 shows that the average UK house price has increased by 1.4pc. There are signs that the house price falls, fuelled by soaring interest rates, have stalled.

Lucian Cook, of Savills, said: “There has been an earlier recovery in the market than people were expecting. That’s been underpinned by inflation falling back and we’ve had more stability in the mortgage markets, with the cost of mortgage debt certainly easing from the back end of last year.”

Property analysts now believe the final three months of 2023 marked the bottom of the market, with prices likely to remain flat or increase very slightly by the end of the year.

Anthony Codling, an analyst at RBC Capital Markets, an investment bank, is more optimistic than most, forecasting that house prices will rise by 5pc for the UK this year. He said: “Mortgage approvals are increasing, wages are rising, and in our view mortgage rates are more likely to fall than rise in the coming months. Looking forward, we believe the housing market’s glass to be half full rather than half empty.”

The return of London

One region that is expected to see greater house price growth is London.

The capital has experienced the weakest price growth since 2016 of any region in the UK, increasing by just 13pc. However, in the first three months of this year, a home in London was more likely to sell above its asking price than anywhere else in England and Wales for the first time since 2016, according to research by the estate agent Hamptons. Now, it is a “buyer’s market”, according to Nehal Virani, of estate agency Property Hub.

Estate agents in the City are growing more confident about the year ahead, according to the Royal Institution of Chartered Surveyors (Rics). Jeremy Leaf, a north London estate agent, said: “The recent increase in listings has meant some buyers are spoilt for choice. Activity in our offices is certainly much stronger than the last few months of 2023, with demand for family houses stronger than for flats.”