How are you doing next year? After a turbulent twelve months, things could be looking up for the housing market

Whisper it softly, but with inflation falling, interest rates stabilizing and homebuyers not being as cautious as feared, the outlook for the housing market in 2024 is much stronger than many expected just a few months ago.

The past year has certainly not been smooth sailing: there has been a 20 percent drop in real estate transactions, average prices have fallen and some mortgage bills have more than doubled for the unluckiest borrowers.

But given the economic problems, it could have been so much worse.

“There appears to be more peace and certainty heading into 2024 and the annual price fall of 1.1 percent underlines the much better-than-predicted resilience of the market this year,” said Tim Bannister, director of Rightmove.

So what does 2024 hold for the market in general? Forecasts range from Rightmove predicting a further fall of 1 per cent to the Office for Budget Responsibility, an independent Whitehall body, warning that prices could fall by an average of 4.7 per cent.

A mid-range price is being tracked by Zoopla, which says the typical price drop could be 2 percent in 2024, but could be less if interest rates are cut at the start of the summer, as many predict.

And what does this mean for the various groups involved in the housing market?

Buyers can be optimistic

These could be the big winners of 2024 as sellers price their homes competitively to secure a quick sale.

Across the UK, sellers will accept an average discount of £18,000 off the asking price, but in London and the South East this rises to £25,000, and the savings can be even greater on some new build properties.

Remember, if you are a cash buyer, you are in the strongest position of all.

Stable year for sellers

Real estate agents advise not to charge too high prices to prevent the house from lingering on the market. And just because pre-sale preparation sounds like a cliché, doesn't mean it's not true: clear out the clutter, do excellent DIY repairs, maximize the property's appeal.

The good news is that most homes sell, usually within two months of going on the market.

Mortgage change alert

About 1.6 million mortgage deals, most of which were made when interest rates were only around 2 percent, will expire in 2024, meaning almost all of those borrowers will have to enter into new deals at 5 percent or more. Ouch.

Help for starters

There is much speculation that a Help To Buy program aimed at first-time buyers will return in the Spring Budget.

The current mortgage guarantee scheme, which allows FTBs to put down as little as a 5 per cent deposit on participating properties, runs until June 2025 and many expect it to be extended. Still, it is difficult to get on the ladder.

For example, the average deposit a first-time buyer pays for a £240,000 three-bedroom home is now £34,500.

But it can be done: the Hamptons agency says 28 percent of all apartments and houses sold this year went to FTBs.

Downsizers on the rise

In the year to August, 41 percent of existing homeowners moved to something smaller, Hamptons says.

The typical downsizer who bought at least three fewer bedrooms saved 53 percent; those who bought one less saved 24 percent.

Most expect downsizing to be a major factor in the housing market by 2024. But it's not all about profit: stamp duty, legal fees, agency fees and moving costs all add up.

New costs for landlords

After a series of tax increases and stricter regulations introduced in recent years, there will be more of the same in 2024.

The capital gains tax exemption will be reduced to just £3,000 from April, meaning landlords will pay much higher taxes if they make a profit when they sell, and the Renters Reform Bill will introduce strict (and expensive) minimum standards for rental properties and compulsory membership of a new damage repair service for tenants.

Rents are likely to rise

New legislation means tenants' power against rogue landlords will increase and high-profile Section 21 eviction powers will be taken away through no fault of landlords. But the overall shortage of rental properties means there will be more rent increases.

Rental company Savills says average UK rents have risen 9.5 percent this year and are likely to see another 6 percent increase in 2024.

New rules for holiday rentals

Some councils, such as those in Greater London, are restricting Airbnb owners to rentals of up to 90 nights a year, while the government is considering introducing a mandatory register of all so-called 'short-term rentals' to pass details to HMRC.

And some municipalities will double the municipal tax on holiday homes from April 2025.

On the market…fresh for 2024

Guildford, Surrey: A two-bedroom apartment in a converted Edwardian residence, with views over the city and the treetops of the Surrey Hills. Struttandparker.com, 01483 342310. £350,000

Lentran, Inverness: A former mill house with four bedrooms and two bathrooms, all in need of modernisation, but retaining many original features. Galbraithgroup.com, 01463 224343. £549,000

Dorking, Surrey: A three bedroom penthouse on the second floor of this property, set in communal grounds with a private driveway. Savills.com, 01737 230202. £549,000