Sales activity, house price growth and the supply of homes for sale have improved so far this year, according to a report.
According to Zoopla’s latest report, new sales agreed are 9% higher than a year ago, and approximately 7% more house sales were agreed in Q1 2024 compared to the same period last year.
The report added that, as new sales grew, this was encouraging more people to list their homes for sale, with around 20% more homes for sale than the same time last year.
Zoopla said that more positive housing market sentiment was down to “faster real wage growth and a healthy jobs market, both of which are boosting”. Improving mortgage rates are also a key factor.
The strongest growth in sales was in Yorkshire and the Humber, where sales growth came to 11%, and the North West was fourth at 13%. Zoopla said that this was due to there being more “affordable homes” in these areas.
Regarding new sellers listing, the South West was up 28% and the North East was 26% up. London only rose by 8%.
“The fact that buyers and sellers are agreeing more sales is positive and evidence that house prices don’t need to fall further to support the continued recovery in sales. Buyers remain price-sensitive, however, and continue to negotiate on price,” the company said.
Two-fifths of sales agreed in March lower than asking price
Zoopla said that two-fifths of sales agreed in March were at a sales price that was 5% or more below the asking price. This is down from around half at the tail end of last year, but “remains high by historical standards”.
The average median discount from the initial asking price has narrowed to 3.9% in March, which is the lowest since July 2023 and in line with pre-pandemic figures.
Zoopla said that, in Q1 2024, the average estate agent had 40 homes for sale, which is back to pre-pandemic levels, so buyers have “more choice and room to negotiate”.
A third of homes for sale have been on the market for over three months and are still listed at the initial asking price, so they could be “potential candidates for a possible reduction in the asking price”.
House price inflation stabilising
Zoopla said that the annual rate of UK house price inflation came to negative 0.3%, which is an improvement from negative 1.4% in October last year.
In Eastern England, annual house price falls were pegged at minus 2.3% and the South East was minus 2%.
“All areas are recording higher annual price inflation than six months ago as sales volumes recover and pricing levels firm. We expect the current trends in pricing to continue into H2 2024 as prices continue to adjust to higher mortgage rates and reduced buying power,” it said.
Growing disposable income could improve affordability
Increasing household disposable income, which is expected to rise by 3.5% over 2024, could bolster housing affordability in 2024, the firm said.
It said that house prices were expected to stay broadly flat over the year.
Zoopla said that the timing and scale of interest rate reductions in the second half of the year was a key contributor to market sentiment and mortgage rates.
“Expectations of lower interest rates are already priced into fixed rate mortgages today. Lower interest rates would likely result in further modest declines in mortgage rates, but how far depends on how low money markets see base rates falling,” the report noted.
Zoopla said economists were estimating that the base rate could fall to 3.5% by the end of 2025, which could equate to mortgage rates at around 4% or more. It said this would improve sales, but would mean incomes would have to rise faster than house prices to “help reset housing affordability”.
Richard Donnell, executive director at Zoopla, said: “Rising wages and falling mortgage rates have boosted consumer confidence, and this is feeding into improving levels of housing market activity over the first quarter of 2024. House prices are falling at a slower rate, but it remains a buyers’ market where there is much greater choice of homes for sale.
“We don’t believe that house prices are about to increase more quickly, but there is more buyer interest. Sellers need to remain realistic on where they set the asking price if they are to take advantage of improving market conditions to secure a sale and move home in 2024.”
Nathan Emerson, CEO at Propertymark, said: “It is great to see house sales starting to rise again. As the housing market starts to enter a busy time in spring and summer, Propertymark would like to see the Bank of England gradually ease people’s borrowing costs and encourage more people to make their next home move by cutting interest rates.
“This would be a brilliant way to further stimulate demand in the housing market, especially as our member agents report a 120% increase in the number of potential buyers registered showing a growing appetite.”
