Zoopla predicts a continued increase in sales market activity, projecting a 10% rise in home sales for 2024 compared to 2023.
The momentum in new sales being agreed has been building for the last 5 months, and the sales market is on track for 1.1 million sales over 2024 supported by new sellers coming to the market.”
– Richard Donnell, Zoopla
The latest Zoopla House Price Index reveals that the number of homes for sale is 21% higher than a year ago, with buyer demand up 11%, and crucially, sales agreed 15% higher than this time last year. This indicates greater buyer confidence and more realistic pricing by sellers. The North East (+17%) and London (+16%) have spearheaded the rebound in sales.
Rate of house price falls slow on rising sales
The UK’s rate of house price inflation has slowed to -0.5%, up from a low of -1.4% in October 2023. This trend of slowing house price falls is observed across all regions of the UK. While five English regions still record annual price falls of up to -2.1%, house price growth has turned positive in the remaining four regions of England, as well as Wales, Scotland, and Northern Ireland, where annual price inflation is 4.3%.
Firmer pricing of homes indicates that house prices do not necessarily need to fall to support sales, as evidenced by estate agents agreeing to an average of six new sales a month, compared to 5.2 last year.
A three-speed housing market
There are tangible variations in home prices depending on location, contributing to a ‘three-speed’ housing market across the UK:
1. Southern England regions: Covering the Eastern, South East, and South West regions outside London, these areas have seen the largest annual price falls. Rising mortgage rates and reduced household buyer power have affected these markets, with the average home price at £344,000 – £80,800, or 30% above the UK average.
2. London: While London remains the most expensive housing market, with an average price of £534,000, it has experienced much lower levels of house price inflation over the last seven years. Affordability has been gradually improving, opening the market to more potential buyers.
3. Rest of the UK: While house price growth has slowed over the past year, annual price falls have been limited in the rest of the UK, where house prices are at or below the UK average. The impact on buying power from higher mortgage rates has been less pronounced.
What’s next for mortgage rates?
Falling mortgage rates, along with faster growth in household incomes, have supported the upturn in activity. Mortgage rates have returned to levels seen a year ago, with lenders withdrawing mortgage deals priced below 4% as the cost of finance for mortgages has slightly increased in recent weeks.
Buyers should expect mortgage rates of 4-5% throughout much of 2024, with rates in this range consistent with flat to low single-digit price rises.
Richard Donnell, Executive Director at Zoopla, comments: “The housing market has proven resilient to higher mortgage rates and cost of living pressures. More sales and more sellers show growing confidence among households and evidence that 4-5% mortgage rates are not a barrier to improving market conditions.
“The momentum in new sales being agreed has been building for the last 5 months, and the sales market is on track for 1.1 million sales over 2024 supported by new sellers coming to the market. While sales are set to increase, we don’t expect house price growth to accelerate further in 2024.”