The UK housing market is hotting up, according to Zoopla’s latest House Price Index, with a positive second half of the year expected for market activity.
Zoopla’s latest data indicates that the housing market is continuing to adjust to 4%-plus rate mortgages with positive signs of increased activity.
While house prices increased by just 0.1% in the past 12 months (to £265,600 on average), house prices have increased across all regions of the UK over the first half of 2024.
Zoopla expects UK house prices to increase slowly but steadily over the second half of 2024, on average increasing towards around 2% by the end of the year.
The improved outlook for the housing market is bolstered by an increased number of homes for sale – higher than at any point in the previous six years. This increased level of choice for buyers is supporting more sales going through.
More sellers naturally means more buyers who appear motivated by a range of reasons. In particular Zoopla is seeing that many would-be movers are those looking to upsize.
However the data also shows that more buyers are having to look further afield to get the home and features they are seeking. This is primarily down to affordability and value for money considerations.
Greater supply has resulted in the number of sales agreed being 16% higher than a year ago, with sales up across all regions and countries of the UK. Sales agreed are now 22% above pre-pandemic levels.
In addition, buyers are paying a greater proportion of the asking price than they were last year, when higher mortgage rates impacted demand. Buyers in the UK are currently paying 96.8% of the asking price – the highest figure for 18 months.
The figure is on a par with the longer-term average and points to continued house price growth. In pound terms, this equates to houses selling for an average of £16,600 below their asking price in June 2024.
No immediate impact from new govt
Nothing in the King’s Speech or the new Government plans has had any material impact on the outlook for the market in the next 12-18 months, according to the research. In the longer term, economic growth, rising household incomes and increased home building will benefit homebuyers and renters.
Zoopla says the timing of the first base rate cut is important. It will deliver a boost to consumer confidence and market activity rather than leading to any major reduction in mortgage rates for new home buyers.
While growth over the last 12 months has been largely static (increasing by just 0.1%) the regional view shows more of a mixed picture, and somewhat of a north-south divide as affordability continues to be more of a constraint in southern England.
For example, while Belfast has seen a 4.3% increase (and Northern Ireland more widely a 3.9% increase) and Scotland has seen an overall increase of 1.4%, South East England saw a fall of -1%, South West England a drop of 0.7% and in the East of England, prices are down 1.2%.
Commenting on the latest report Zoopla executive director Richard Donnell said: “The housing market is starting to hot up after a stone cold 2023. There are clear signs of growing confidence amongst buyers and sellers with many more homes for sale and buyers paying an increased proportion of the asking price. We expect to see more sales but house price inflation will be kept in check by more supply and affordability pressures keeping a lid on buying power, especially across southern England.”
He added: “The housing market is essentially an extension of the UK economy. Government policies focused on economic growth that feeds into income growth will help support both home buyers and renters. The Bank of England will have more impact on the market in the short term and much depends on the timing of the first base rate cut.”
Propertymark chief executive Nathan Emerson commented: “It is fantastic to see further positivity and confidence returning to the housing market, and now that the general election is out of the way and we have a promise of 1.5m new homes across the next parliamentary term, we should start to see even more confidence and affordability across the sector.”
Emerson added that it was vital that the new UK Government takes supply issues seriously, as this would help stabilise house prices in the long-term. He is also keen to see a: “Connected communities’ approach applied with the supply of new homes and one that delivers the right homes in the right areas at the right time, while paying extreme attention to ensuring available land is utilised ahead of any move on greenbelt areas.”
