House prices in the UK are predicted to decrease in 2024, while rental costs are projected to increase, analysts say

The official UK forecaster suggests a nearly 5% decline in property prices, while experts forecast rent for new properties could rise by 5-6% after a year of significant hikes. This trend may challenge first-time buyers trying to leverage the dip in housing costs due to ongoing rent burdens.

Economic sluggishness in 2024 is expected to impact the housing market, with a possibly less stable job market and higher-than-usual mortgage rates. Many fixed-rate mortgage deals will expire within a year, potentially leading to steep payment increases for homeowners.

Mortgage lending is anticipated to fall by 8%, and financial institution UK Finance predicts more people might struggle with their mortgage payments. Nationwide, the largest building society in the UK, expects a muted market in the next year, with prices possibly remaining flat or declining by up to 2%. The OBR estimates a 4.7% decrease, while Halifax predicts a drop of 2-4%.

Renters are facing rising costs and competition in the private sector. Increases over the past three years have been steep, but the growth rate is expected to slow down to 5% by the end of the next year. Landlord pressure and sales have reduced rental availability, with no likely near-term increase in stock.

To improve their chances in the competitive rental market, potential tenants are advised to be proactive: search early, register with various agents, keep employment and previous landlord references ready, foster agent relationships, confirm their budget, and consider social media for early property notices.