By Search Partnership

Published 29th Dec 2023, 03:00 GMT

Search Partnership director Tom Robinson, says: “Between 2009 and June 2022, the Bank of England base rate did not rise above 1.5 per cent. Since then, we have seen the base rate rise significantly to 5.25 per cent and homeowners and buyers alike have been seeing their monthly payments increase substantially.

“Similarly, between 1992 and the end of 2021, inflation only reached above 3.5 per cent on two brief occasions. The peak in October 2022 at over 11 per cent is certainly unfamiliar territory for consumers.

“The lower end of the market is generally the most volatile in a downturn, especially when interest rates rise. With a 25-year term, interest only, a 1.5 per cent interest rate on a mortgage of £200,000, equates to £777 per month.

“With interest rates at at six per cent, this increases to £1,289 per month. Fortunately, about 74 per cent, three quarters, of UK homeowners are on fixed rate mortgages and this has helped to spread out the timings of those remortgaging at the end of their allotted term.

“This has lessened the impact of higher rates on house prices, and probably prevented a UK housing market crash.

“What is worrying, is the fact that 1.4 million of these fixed rate mortgages will come to an end in 2024 and this will have a much larger impact on affordability. We believe it will help maintain a downward pressure on prices, as those who can’t afford their monthly payments sell and more stock enters the market.

“Also, buyers tend to attempt to negotiate harder on their purchase prices when the cost of borrowing is high so that too should be taken into account.

“The average house price in England has gone from £311,000 in November 2022 down to £300,000 in April 2023 and back up to £310,000 in November 2023.

Despite the usual commentators deploying some doom and gloom headlines, this is a remarkably steady performance when we look back over the year.

In Yorkshire and the North East, average prices are now 1.5 per cent higher than 12 months ago, making them two of the country’s best performing regions, which is impressive.”

Fellow Search Partnership Director, Toby Milbank, added: “It has to be born in mind that these national and regional averages mask the fact that properties priced in excess of £1 million have not performed so well.

“Achieving a guide price of between £1 million and £2 million has been increasingly difficult, in Yorkshire in 2023. The Search Partnership’s analysis of higher end sales shows that the actual sale prices achieved in this bracket throughout the year, are transacting at nine per cent below their guide prices.

“As we look towards 2024, interest rates seem unlikely to rise further, which is a good omen, and they may even reduce during the year.

“ As 1.4 million fixed rate mortgages come to an end during the year, this is a major concern and will reduce the chances of any material rises in 2024.

“The tea leaves are leaning towards either one per cent up or one per cent down for 2024. That is nothing dramatic, which is a welcome thought as we look ahead to next year.”

Yorkshire property market prediction from The Search Partnership