This is according to data from the latest Zoopla House Price Index. The report also reveals that homebuyers are largely shrugging off the election with new sales agreed 8% higher, with demand up 6% and 19% more homes for sale than a year ago.

There are signs that market activity is beginning to seasonally slow. Sales agreed are down slightly month on month across all regions, led by the North East (-6%) and West Midlands (-5%) as the overall stock of homes for sale continues to grow across all areas, albeit at a slower rate than recent months.

Zoopla has a long run model that tracks whether UK house prices are too expensive or fairly valued. This highlights how UK home prices were more than 50% over-valued in the run up to the global financial crisis in 2007, and even more over-priced in the late 1980s housing boom. In both these cases, economic recession led to double digit house price falls.

Latest analysis finds that the jump in mortgage rates over 2023 led to UK house prices becoming over-valued by 13% at the end of 2023. This more modest over-valuation of home prices explains why there have been modest annual price falls over the last year compared to previous periods.

Currently, UK house prices are estimated to be 8% over-valued (Q1 2024) but by the end of the year, this over-valuation will disappear, assuming that house prices rise 1.5% and mortgage rates remain at 4.5%. Rising incomes and longer mortgage terms are helping to improve affordability which will, in turn, support the continued improvement in sales volumes and single digit house price growth over H2 2024.

In contrast to reduced sales throughout 2023, Zoopla data shows that the market remains on track for 1.1 million sales in 2024.  And 75% of these sales expected in 2024 are either completed or agreed and working toward a completion – with a quarter of a million sales yet to be agreed.

The 1.1 million sale figure is 10% higher than 2023 but still below the 20-year average, however rising sales are positive and show more realism on the part of sellers and renewed, cautious confidence amongst buyers.

Commenting on the latest report Zoopla executive director Richard Donnell saids:  “The housing market continues to adjust to higher borrowing costs through modest house price falls and rising incomes.  Buyers using mortgages are also relying on longer mortgage terms to gain that extra few percentage points of buying power to afford a home.”

He added: “The general election campaign has had a limited impact on market activity although the seasonal summer slowdown is arriving. Sales agreed continued to increase and more homes for sale means more buyers looking to move in the second half of the year. The timing of the first cut in the base rate is a key moment and will give a boost to both market sentiment and sales activity. Overall, we expect house prices to be 1.5% higher over 2024”

Responding to the Zoopla HPI, Propertymark chief executive Nathan Emerson commented: “It’s been a positive year so far for the housing market, and it’s extremely upbeat to see confidence returning, despite some of the challenges people have faced such as high inflation and interest rates.”

He continued: “With the general election now less than a week away, we are keen to see any incoming government lay down their full plans to further support current homeowners on aspects such as energy efficiency, but also to fully get behind key groups like first-time buyers as they set out on their property journey.”