House Price Index from Zoopla – 28th October 2024
2024 set to be a bumper year for housing sales with total value of homes in sales pipeline up 30 per cent to £113bn, reports Zoopla
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Rising incomes and the lowest mortgage rates for two years are supporting the highest level of new sales agreed since autumn 2020
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UK house price growth has increased to +1 per cent up from -0.9per cent a year ago
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The pipeline of sales agreed working through to completion is the largest for four years and 30 per cent higher last year – the total value of these homes £130bn
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First-time buyers on track to be largest buyer group at 36% of sales in 2024 as gap between buying and renting widens
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A possible return to previous lower levels of stamp duty relief in the upcoming budget will see an additional 20 per cent of first-time buyers pay stamp duty, some by as much as £15,000.
The latest House Price Index from Zoopla, one of the UK’s leading property websites, reveals that 2024 is set to be a bumper year for house sales. Rising incomes combined with average mortgage rates at their lowest for two years1, have resulted in the highest level of new sales since late 2020.2
Comparatively, house prices are rising slowly, up by just 1 per cent over the last 12 months3, compared to -0.9 per cent a year ago. Price inflation is being held back by a large choice of homes for sale and affordability pressures which are keeping buying power in check.
In more affordable areas, house prices are rising at an above-average rate for example the North-East (2 per cent), Yorkshire & Humberside (2 per cent), North-West (2.3 per cent), Scotland (2.4 per cent) and Northern Ireland (5.6 per cent). Conversely, house prices are down slightly in Eastern England (-0.3 per cent) and the South-East (-0.1 per cent). UK house prices remain on track to be 2 per cent higher over 2024 as price falls from this time last year drop out of the annual rate of price inflation.
Sales pipeline valued at £113bn
Sustained growth in new sales over 2024 has led to the largest sales pipeline the market has seen for four years. Zoopla’s analysis reveals that there are currently 306,000 homes working their way through the buying process to completion, 62,250 (26 per cent) more than 12 months ago. The total value of these sales has hit £113bn, 30 per cent higher than this time last year when a spike in mortgage rates hit buyer demand and reduced the number of sales agreed over 2023 H2.
Momentum in new sales remains strong and looks set to continue into December, supported by a high supply of homes for sale. Many of the most recent sales will complete in the first half of 2025.
First-time buyers the largest buyer group in 2024
The growth in sales is being driven by a combination of first-time buyers (FTBs) and existing homeowners who have delayed moving decisions until borrowing costs fell and the outlook improved. FTBs are set to be the biggest buyer cohort in 2024, accounting for 36 per cent of all sales followed by existing homeowners (31 per cent), cash buyers (27 per cent) and landlords buying with a mortgage (7 per cent).
The rapid growth in rents and the decline in mortgage rates have shifted renting versus buying dynamics, supporting more FTB purchases. The average mortgage repayment for a typical UK FTB home is 17% cheaper than renting, compared to a much smaller 2 per cent difference a year ago when mortgage rates were higher.
Will October’s Budget see first-time buyers hit by stamp duty?
Today, FTBs do not have to pay any stamp duty on properties that cost up to £425,000 and pay partial stamp duty on homes up to £625,000 (England and Northern Ireland only). Currently, we estimate that 80 per cent of FTBs pay no stamp duty, with 14 per cent paying partial duty.
This support for FTBs is set to end in April 2025, unless reversed in the Budget next week. A return to previous thresholds would result in an additional 20 per cent of FTBs being liable to pay stamp duty and a further 14 per cent would be required to pay a partial amount.
The impact of a return to previous thresholds would be more keenly felt in southern England where the average FTB in London and the South East would pay £5,600 and £1,390 respectively, compared to £0 today. In parts of London such as Camden, Hammersmith and Fulham and Islington with average house values over £600,000, FTB could pay an additional £15,000 in stamp duty. Faced with higher buying costs, FTBs will want to pay less for homes in these areas which will keep price rises in check.
Richard Donnell, Executive Director at Zoopla comments: “It is positive to see the sustained increase in sales activity over 2024 which reflects growing confidence amongst buyers and sellers supported by lower borrowing costs and rising incomes. Overall, the market remains on track for a modest 2% price increase in 2024 and 1.1m sales.
“First-time buyer numbers have recovered as mortgage rates have fallen but a sizeable deposit is still required to buy. Possible changes to stamp duty relief will only create further barriers to ownership for this group who already face significant affordability constraints.
“The housing market doesn’t need short term policy tweaks from the Budget. The health of the housing market and people’s ability to afford housing is linked to the health of the economy. It’s vital the Budget is focused on economic growth and expansion in jobs and rising incomes. The primary focus should be on providing the financial support and investment needed to help build the homes the nation needs for buyers and renters.”
Chris McLaughlin, Director at Bristol-based Ocean Estate Agents said: “The housing market is experiencing significant variation across districts and price bands. In some areas volume has grown by over 50% but on average year-on-year growth has reached approximately 30%, largely driven by lower interest rates, which have spurred a resurgence of first-time buyers. Furthermore, many sellers, who had transitioned to rental accommodation during the period of higher interest rates, are now re-entering the market, often mortgage-free or with substantial deposits.
“Buy-to-let activity has notably declined as smaller or accidental landlords exit the market, influenced by less favourable financial conditions and increasing regulation. Consequently, much of the new housing stock now comprises former rental properties. Additionally, transaction completions have risen in the last couple of months, particularly within the investment property sector, as sellers seek to conclude deals ahead of potential changes anticipated in the upcoming budget.”
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