Is now a good time to sell a house?

The property market slowed for much of 2023 as sellers struggled to attract buyers who have seen their purchasing power reduced by high mortgage rates, but there are signs that the market is springing into action after the first few months of 2024.

Average house prices fell for much of 2023 but more recent data shows prices are on the rise again as mortgage rates have dropped and buyer demand has improved.

The latest Nationwide house price index showed average prices rose by 1.2% on a yearly basis in February, while Halifax suggests values were up 1.7% over the same period, which is slightly lower than the 2.5% annual growth registered in the first month of the year.

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Zoopla has also highlighted that UK buyer demand was up 4% annually in the first weeks of March 2024, while sales agreed rose 9%.

Sellers are still having to cut prices by an average of 3.9% to attract viewings but this is down from 4.5% at the end of last year.

Many analysts still expect house prices to fall this year though, even if market activity has been busier.

It can therefore be hard to know when is the right time to sell a property, especially in an uncertain housing market.

The mood of market does seem to have changed since the start of 2024 though as inflation has dropped and mortgage rates continue to fall further.

Pricing is a key factor though as buyers remain sensitive to high mortgage rates.

Overall most commentators say prices are going to drop further as the property market cools, although some have revised their forecasts.

Estate agency and property brand Knight Frank had previously predicted a 4% drop in prices but now believes they will actually rise by 3% this year.

This paints a tricky picture for sellers who may not want to sell at a time that the market is falling as they may not get the best value for their property.

Falling house prices may make it a good time to buy a house, but if you’re thinking about selling your house, should you wait or take the plunge today?

Is now a good time to sell a house?

Whether or not now is a good time to sell will really come down to a seller’s individual circumstances, says Karen Noye, mortgage expert at Quilter. “In times of uncertainty it can pay to take a wait and see approach – particularly if there is a risk of making a loss - but not everyone’s situation will allow for this.”

Many sellers will also be looking to buy so even if your home sells for less than
you had hoped, you could make savings on your onward purchase.

“If the property you are looking to buy is likely to also cost less due to the current market conditions, your finances add up, and it is the right property for you that ticks all the boxes for both now and in the longer term, then it may make sense to sell and make that move,” adds Noye.

But if you do not intend to buy after you sell, holding off might be a better option as house prices are likely to rebound in the longer term.

“However, while the markets are looking more stable now compared to the end of last year, we still have a way to go and it could be some time before house prices start to climb again,” says Noye. So, you might end up having to hold on to your property for longer than you want to.

“If you are in this position, you will need to seriously consider whether holding onto the property for the time being is viable or not.”

You will also want to look at prices in your area, and prices for the type of home you’re selling, so that you have a point of comparison and a higher chance of selling.

If you’re thinking of selling you’ll also have to consider the costs of doing so. This can include estate agent fees, legal fees, stamp duty tax, and capital gains tax. So if you’re selling because you would like to free up some money, weigh up whether it will be worth it after costs.

Sellers must be “realistic” about asking prices

Sarah Coles, head of personal finance at Hargreaves Lansdown, says it is “perfectly understandable” after having seen prices rise so far that sellers will hope that continues.

”In reality, however, prices have turned, and if sellers don’t realise this up-front, they’re likely to sell for less in the end,” she says.

This is echoed by Rightmove research that suggests pricing "temptingly" rather than just testing the market, is the best way to attract buyers at this time of year and in this economic climate.

Coles adds that pricing too high means wasting any initial interest in a property, because buyers will baulk at the price.

"They’ll then have to cut – at least once – which buyers may read as off-putting levels of desperation," she says.

"Being too optimistic can be an expensive mistake in a market like this one.”

What’s happening with house prices?

Average mortgage rates went above 6% during 2023, which spooked buyers and has seen mortgage approvals and sales fall while transactions that have gone through were for lower prices.

Mortgage pricing is starting to fall though, which could boost demand and help house prices recover. 

The average two-year fixed mortgage rate is now 5.80% or 5.38% for a five-year fix, according to Moneyfacts.

This is still higher than the low rates of 1% to 2% that many buyers will be used to, hitting buyer budgets.

All house price indexes measure growth differently, but the downward trend also seems to be present across the board.

Nationwide reported annual falls in 2023 and is expecting a dip this year.

But some analysts have revised their forecasts due to lower inflation and falling mortgage rates. 

Estate agency brand Knight Frank now expects average property prices to rise by 3% this year instead of dropping.

Meanwhile Zoopla expects the number of property sales to fall to its lowest level since 2012. 

The property website still expects average prices to fall this year, warning that mortgage pricing is still higher than what buyers have been used to in the recent past and the market is adjusting to that.

The Royal Institution of Chartered Surveyors reported weak sentiment among property professionals for most of last year year but its latest surveys suggest lower mortgage rates are now helping home sales recover.

Halifax expects house prices to fall by 4% this year while Nationwide is also anticipating a single digit drop.

The Office for Budget Responsibility (OBR) expects that by the end of 2024 prices will have fallen by 2%, which is at least less drastic than the 5% it previously predicted.