House prices continued to fall across the country last month, despite the significant uptick in market activity, according to the latest house price index from Zoopla. 

The property website’s figures for February show that there was a 15% increase in sales over the month, compared to the same period last year, and buyer demand was up by 11%. 

The number of properties for sale is also 21% higher than a year ago — a sign that sellers are returning to the market despite flattened prices. 

Zoopla says sales momentum has been recovering for five months, and on this trend it is predicting there will be 10% more house sales in 2024, when compared to the previous year. This forecast would see 1.1m house sales in the UK this year. 

However, despite increased activity, house prices inflation continued to slow — albeit it a modest rate — with prices slipping by 0.5% year-on-year across the UK. However this masks considerable regional variation, with house price rising in seven of the regions monitored by Zoopla, and falling in five.

Northern Ireland saw the biggest annual rise in house prices — up by 4.3%, with property prices in Scotland showing a 2.2% annual gain. The biggest fall was in the East of England where prices fell by 2.1%, with properties in the South East losing 1.9% year on year, the South West slipping by 1.7%, and London down by 0.8%.

Zoopla says that that these figures show a three-tier housing market int he UK, with splits emerging between Southern England, London and the rest of the UK by affordability. 

There was also a regional differences in market activity. The North East and London led on the number of sales agreed over the past month, with figures up 17% and 16% respectively. However the number of agreed sales were only up by 8% in Scotland and both the West and East Midlands. 

Zoopla pointed out that falling mortgage rates have been an important catalyst for improving market sentiment and increased levels of housing market activity in recent weeks, with mortgage rates falling back to where they were a year ago. 

However it points out that this decline is likely to plateau at current levels with lenders starting to pull mortgages deals below 4% as wholesale financing costs have started to increase modestly again.

Commenting on this latest housing data, Propertymark CEO Nathan Emerson, CEO at Propertymark says: “It’s encouraging to see a year on year momentum within the housing market and these figures should encourage people who were hesitant about selling their home to consider their move.”

He pointed out that although interest rates have not started to fall the Bank of England’s last Monetary Policy Committee meeting should give people confidence as t that their borrowing costs are unlikely to increase.

“If inflation falls as expected, we hope that the Bank of England will consider cutting interest rates which will help ease the financial strain placed on the nation.”

Hargreaves Lansdown head of personal finance Sarah Coles says that while buyers and sellers appear to be returning to the market, challenges remain. “It’s worth highlighting that property prices are dropping, asking prices are being cut, and the market faces some serious hurdles.

“Falling mortgage rates at the end of 2023 and beginning of 2024 made the key difference in boosting market optimism, and rates are starting to rise again. They’re still only roughly where they were a year ago – with the average two-year rate is still under 5.75% – but a rise may persuade some buyers to press pause.”

She says that while there are more buyers around, demand is far from fully recovered. “With properties for sale up a fifth, the balance of power is likely to remain with buyers, who are still securing higher than average price reductions.”

Coles adds: “The picture varies a great deal across the country. Unfortunately for many, it’s still grim down south. In the south, excluding London, we’re seeing the impact of relentless eye-watering price rises over the past few years. As a result, affordability is a major problem, and we’re still seeing asking prices drop significantly.”