UK house prices set to fall in 2024, say experts

House prices in the United Kingdom will fall by 5 percent during 2024, according to industry experts UK Finance.

The trade association, which represents more than 300 companies in the banking and financial services sector, said the fall will be down to reduced demand, with the country's stagnant economy and its unreliable employment market denting confidence and dissuading many people from buying a first home or moving to a larger property.

UK Finance said it also expects rents to rise, by around 5 to 6 percent, which will swallow up more renters' income and make it harder for them to save the deposit needed to buy a home.

The online property portal Zoopla said rents have already risen by 31 percent during the past three years, which equates to around 3,360 pounds ($4,266) a year.

UK Finance said mortgages are also likely to continue to be expensive during 2024, with the UK's central bank, the Bank of England, set to keep its main interest rate high in the fight against inflation.

It said, with demand down, the amount of money lent for house purchases will fall by 8 percent.

Nationwide, which is one of the UK's main mortgage lenders, said it too expects 2024 to be a subdued year for property sales.

"If the economy remains sluggish and mortgage rates moderate only gradually, as we expect, house prices are likely to record another small decline or remain broadly flat over the course of 2024," Robert Gardner, the company's chief economist, told the BBC.

And major lender Halifax, which is part of Lloyds Banking Group, said it expects house prices to fall by between 2 and 4 percent.

The Office for Budget Responsibility, which is the UK government's official forecaster, has said it expects house prices to drop by almost 5 percent during 2024.

The Financial Times newspaper said more expensive mortgages will mean the number of first-time buyers in the UK will hit a 10-year low this year and continue to be low during 2024, with many young renters turning to the "Bank of Mum and Dad", or parental loans, as a result.

Lucian Cook, head of residential research at estate agency Savills, told the paper: "It's not just about the numbers who are buying. It's about who is buying, and the social consequences of who is able to buy."

He said first-time buyers with insufficient savings and a desire to avoid high interest rates have been "heavily reliant on the Bank of Mum and Dad to help them get there".

Savills estimates people relying on parental support to buy their first home soared during 2023 to about 60 percent, after standing at around 46 percent in 2022.