Zoopla’s House Price Index shows that new sales agreed are up 13% on 2023 as the housing market gets off to a strong start in 2024.
House sales agreed – a key measure of market confidence and activity – are up across all regions and countries of the UK in the first three weeks of 2024.
According to data from the property portal, the average UK home is now worth £264,400, while in London the average property is worth £536,800.
Zoopla’s House Price Index shows that annual UK house price falls have moderated again and stand at -0.8% (end December 2023), an improvement from the -1.4% low recorded in October 2023.
But experts at Zoopla said “it’s important not to over-interpret the positive start to the year – there is some upside for sales volumes, but we remain in a buyers’ market”.
A buyer’s market
Zoopla said market activity has been boosted by pent-up demand from the end of 2023 and mortgage rates dropping below 5%. But a fifth of sellers are still accepting more than 10% below the asking price to secure a sale.
Yorkshire and The Humber (+19%) and the West Midlands (+17%) are leading the improvement in new sales. Zoopla said this is “evidence that buyers and sellers are becoming more aligned on pricing”.
One key trend over 2023 was sellers cutting asking prices to attract buyer interest – this has continued into 2024.
The overall supply of homes for sale is also growing – indicating more confidence among sellers. The overall supply of homes on the market is 22% higher than last year, while the average estate agent has 28 homes for sale.
House sales: what’s happening in London?
London has led the rebound in new buyer demand (+21%) and the data suggests that housing affordability in London is the best since 2016.
This increased demand is evident across the market, with inner and outer London, alongside core commuter areas all registering increased demand for homes. This may be an early sign that the tide is turning for the London sales market after seven years of lacklustre activity compared to the rest of the UK.
But housing in the capital remains expensive with house prices standing at 13 times earnings; however, this is down from a high of more than 15 times in 2016.
London house prices have risen just 13% since 2016 – compared to 34% at a UK level. Zoopla said this underperformance was down to tax changes, Brexit and the pandemic which hit demand and working patterns. It was also compounded by higher borrowing costs which hit higher value markets harder than lower value areas.
Richard Donnell, executive director at Zoopla, said: “It’s a positive start to the year with all key measures of housing activity higher than a year ago. The fall in mortgage rates has led to a rebound in buyer demand and sales following a weaker second half of 2023 when many movers put decisions on hold.
“This improvement in activity will support sales volumes which, at one million, reached an eleven-year low in 2023. We don’t see these trends as a precursor to higher prices in 2024 as it remains a buyer’s market. Sellers looking to move should be encouraged by these early signals of activity, but buyers remain price sensitive and focused on value for money. Over-optimism by sellers could quickly stall the current improvement in market activity.”
Sarah Coles, head of personal finance, Hargreaves Lansdown noted that there were ‘positive signs’ but emphasised that sellers ‘shouldn’t get carried away’.
She said: “The arrival of a new year, along with a clutch of cheaper mortgages, breathed some life back into the property market. Sellers and buyers rejoined the property hunt, and homes started to shift again. There are some real positives for sellers to take comfort from, but they can’t afford to get carried away.
“In early December, we saw the average two-year fixed-rate mortgage fall below 6%, according to Moneyfacts, and since then they have continued their march south, so the average is now only a little over 5.5%. The emergence of more affordable deals was just what some buyers were waiting for. We saw an uptick in the number of people hunting for a property, bringing real hope for those who have stuck it out in such a stagnant market.
“This is a real positive, but sellers shouldn’t get carried away. We also saw a flood of properties onto the market, so buyers can still afford to be choosy. It means homes have to be priced realistically and sellers should still be prepared to accept an offer. At the moment, a fifth of sellers are accepting an offer of 10% below asking price. Overall, this is helping depress prices, which are still lower than they were a year earlier.”
