The UK housing market is being forecasted to make a strong stance throughout the year. This comes only months after it was expected the housing market would falter as hopeful home buyers struggled to climb onto the property ladder. The lack of demand was hoped to bring down asking prices and home buyers would eventually return, but not likely would there be a strong rebound until 2025. At the same time, it was expected inflation would no longer be a problem and borrowing would cease to be as expensive next year as it is now.

Home buyers have been returning to the market earlier than expected. Part of the reason is due to lenders creating a competitive market and dropping interest rate offers. Despite the Bank of England’s Monetary Policy Committee (MPC) keeping the standard base interest rate steady at 5.25% for the last four consecutive meetings, lenders created their own lower rate offers and home buyers took advantage of the opportunity.

Mortgage offers began to fall further as more lenders joined in the competition for the attention of borrowers. In only a matter of weeks after lenders began cutting rates, mortgage products began to appear on the lending market for home buyers with interest rates below the Bank’s base rate.

Meanwhile, property asking prices began to decline as sellers hoped to take advantage of the uptick in attention from buyers. Asking prices began to decline and while some experts viewed this as a sign sellers feared home buyers were exiting the market, others had the opinion it was instead home sellers realizing buyers would return due to lower rate offers. With lower asking prices and cuts to mortgage rates, home buyers had an unexpected opportunity no one would have predicted.

There has been a discussion of a government backed scheme to be announced shortly that will be yet another opportunity for home buyers. The scheme will offer those that qualify for the benefit to purchase with only a 1.0% deposit. This will no doubt bring more buyers to the market. 

Because the current base rate has been a deterrent to property purchases, the forecast of it declining would suggest a return of buyers to the housing market. 

Inflation, which had been on a downward trajectory, has remained steady at 4.0% for the past three months. While it is double the target rate of 2.0%, the MPC expects it to loosen its stubborn grip and begin to decline once again. If so, the base rate could be cut, and many believe it could be as soon as June. Again, more motivation for home buyers to shop the market.

Lower asking prices, greater supply of properties on the market, a government scheme to allow 1.0% deposits, and one or more cuts to the current 5.25% base rate could combine to give a boost to the housing market for 2024.

A strong housing market, target bound inflation, and lower interest rates are optimistic outlooks that could provide a better economic position for the UK and bring confidence back to consumers in need of relief from the financial strains that began with the pandemic.

A recent report from online property listing company Zoopla has forecasted UK property sales will increase by 10.0% this year. 

If indeed the housing market remains not only resilient, but experiences strong growth this year, it will relieve the fears of many homeowners and experts of a vast number of mortgages falling into negative equity. 

Whether all of the expected outcomes emerge for the housing market and UK economy could be hinted at this month. March will bring news of the spring budget and whether the 1.0% deposit scheme is available to home buyers. The next inflation rate data release will certainly be important. A fourth month report of a steady inflation level could bring fears of the MPC needing to increase the base rate or hold the rate steady longer than expected. A less than positive outlook could cause lenders to tighten their offers and raise their rates

March will bring with it valuable information for determining not only what strategies home buyers should prepare, but also homeowners in need of remortgages. The next MPC meeting is scheduled for 21 March. The spring budget will be released 6 March and the information on the new home buyer scheme is due before the budget is shared. While the next inflation report will be released prior to the MPC meeting on 20 March.

Perhaps the best advice for home buyers and homeowners in the days ahead is to mark your calendars and cross your fingers that all goes well for the economy in March, as it could make all the difference for what opportunities come in the months ahead.