As 2024 comes to a close, we reflect on the improvement in the housing market since the start of the year. More positive underlying economic and financial drivers of residential prices have been critical to that change.
At the start of the year interest rate cuts hadn't commenced, inflation was double the target rate and economic growth wasn't strong enough to help drive price growth.
By the end of 2024, a range of those economic drivers had improved and contrary to negative consensus forecasts at the start of the year, house prices have grown by 3.7%.
Critical to that change has been lower inflation allowing the Bank of England to start cutting interest rates. Five year mortgage rates are improved on this time last year and significantly improved on two years ago.
Economic growth has been sluggish and there have been points throughout the year that caused growth to pause (uncertainty surrounding the General Election in July and the Budget in October) but nevertheless economic growth has been stronger in 2024.
Next year looks set to be a similar year for the housing market: economic forecasts currently suggest a little potential upside to GDP growth, continued lower inflation (although sitting just above target) and further interest rate cuts.
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