Buyer demand is up by a tenth compared to this time last year, data from property listing firm Zoopla has suggested.
Zoopla said the drop in mortgage rates coincided with a faster rise in buyer demand than last year and the pre-pandemic period of 2019.
The company said this was most prevalent in London and the South East, where house price gains had been lower which improved affordability.
It said this reflected the trend seen in its most recent house price index which showed there was a 17% rise in new sales agreed.
“This improvement in market activity looks to be rolling over into the start of 2024, driven by improving mortgage rates,” Zoopla added.
Zoopla: ‘Modest house price falls’
The company said there were signs that the pace of house price falls was slowing but the largest declines were up to 4% and concentrated in southern England, where the most demand was during the height of the pandemic.
House prices are also dropping where there was a demand for second homes, Zoopla said, in areas such as North Wales and the South West.
Zoopla said: “House price falls have been modest, despite higher mortgage rates, because of the mortgage regulations introduced in 2015 by the Bank of England.
“These regulations stopped the development of a bubble in house prices and are a key reason why price falls have been small over 2023.
“The net result is that most areas have house prices still well above the levels they were before the pandemic hit the market, which created a boom in demand for housing.
“The average UK home is now worth 18% (or £41,000) more than it was at the start of the pandemic in March 2020.”
Boosted buyer demand
Zoopla said lower mortgage rates would push buyer demand in the coming months.
It added: “Buyers understand that there is more room to negotiate on pricing with sellers but many will also still need to sell a home to unlock their next move.
“Sellers will need to remain realistic over the value they expect to achieve from their property and be prepared to negotiate on price.”
