UK Housing Market Update: Key Insights for 2024
Market Recap: October 7, 2024
Today, we have data coming out from Europe, the U.S., and the UK. House prices have gone up, but manufacturing in Germany has dropped sharply. Later today, retail sales data and speeches from central banks will be key focus points.
Key Economic Events
UK House Prices Slightly Increase in September
The Halifax House Price Index for September shows a increase of 0.3% month-on-month, in line with market expectations. Year-on-year, house prices have risen by 4.7%, showing continued resilience in the UK housing market despite headwinds. This follows the previous year’s growth of 4.3%, indicating that while growth is still positive, the rate of increase is stabilizing.
- Germany’s Manufacturing Orders: September’s data revealed a sharp drop of -5.8%, well below the forecast of -2%. This is a significant shift from the 3.9% rise we saw in August, signaling a worrying contraction in industrial demand and weighing heavily on the euro.
- Eurozone Retail Sales: Later today, we’ll see the Eurozone’s retail sales figures, which are expected to show a 0.2% month-on-month rise and a 1% year-on-year increase. These will give us a clearer picture of consumer activity across the bloc.
Currency Movements:
- EUR/USD: The euro is trading down 0.07% at 1.09677 today. On a weekly basis, the pair has fallen by 1.51%, as weak German manufacturing orders and other Eurozone data weigh heavily on the euro.
- GBP/USD: The pound is marginally lower at 1.3160, down 0.02% on the day, reflecting cautious trading around mixed UK data. The pair has seen a 1.94% weekly decline, although it remains up 7.21% year-on-year.
- AUD/USD: The Australian dollar saw a slight rise of 0.17% today, trading at 0.68040. Australia’s economic ties with China continue to support the pair, despite a 1.61% decline for the week.
- NZD/USD: The kiwi dollar is also up by 0.05%, trading at 0.6106. However, it remains down 2.89% for the week, as weaker commodity prices weigh on the New Zealand dollar.
- USD/JPY: The yen continues to struggle against the dollar, with USD/JPY up 0.18% to 148.388. Over the past week, the yen has gained 3.24%, but the outlook remains shaky.
- USD/CNY: The Chinese yuan is trading down 0.11% against the dollar at 7.08745, as China’s economic recovery continues to falter.
- USD/CHF: The Swiss franc is down 0.03% at 0.85888, with the pair experiencing a 1.48% gain for the week, showing some resilience amid market uncertainty.
Commodities Update:
- Crude Oil: Brent crude is trading at 74.24 USD/bbl, down 0.19% for the day, though it has gained 8.89% for the week. Oil markets remain sensitive to global economic data and geopolitical risks.
- Gold: Gold prices dipped slightly by 0.45% to 2640.71 USD/t.oz, as the yellow metal continues to act as a hedge against market volatility.
UK House Prices in 2024: Why Have They Risen and Will They Fall?
UK house prices have risen due to several factors, including low interest rates set by the Bank of England, making borrowing cheaper. When interest rates are low, people can afford larger mortgages, which often drives up property prices. Additionally, demand outpacing the supply of homes has contributed to the steady increase.
After a brief drop in house prices earlier in the year, largely due to rising mortgage rates, some experts predict that the UK housing market could see modest growth throughout 2024. This outlook is supported by expectations of rate cuts and falling swap rates, which are calming the market.
Over the next five years, UK house prices are expected to grow gradually. In 2024, prices may rise by around 3%, driven by easing inflation and lower mortgage rates. By 2028, cumulative growth could reach around 20%, although this will vary depending on the region.
Waiting to buy a house in 2024 could be beneficial due to forecasts predicting a fall in property prices. According to projections, house prices may drop by about 7.6% between late 2024 and early 2025, which could offer better opportunities for buyers looking for more affordable options.
While there are mixed opinions on the housing market, some experts believe 2024 could be a favorable time to buy. Despite uncertainties, there are forecasts of slight price drops, with some expecting prices to rise by 3–4% by the end of the year. Ultimately, personal financial situations and market conditions should guide this decision.