UK housing market hotting up
House prices on track for 2% increase in 2024, with supply up 16% and buyers paying on average 96.8% of asking price
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The number of sales agreed is 16% higher than a year ago
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Average agent has more homes for sale than at any point in the past six years
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Buyers paying 96.8% of the asking price, the highest for 18 months, and an average of £16,600 below the asking price
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The new Government will have ‘no material impact’ on housing market in next 12-18 months – a rate cut by the Bank of England would boost confidence and activity
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North-South divide shows prices over the past 12 months have, in general, increased in the North of England and fallen in the South, where affordability remains a barrier along with more supply
UNDER EMBARGO UNTIL 00.01 TUESDAY 30TH JULY, LONDON: Just like the current temperatures, the UK housing market is hotting up, according to Zoopla’s latest House Price Index, with a positive second half of the year expected for market activity more than house prices.
The housing market is continuing to adjust to 4%+ mortgages with positive signs of increased activity. While house prices increased by just 0.1% in the past 12 months (to £265,600 on average), house prices have increased across all regions of the UK over the first half of 2024.
Positive signs for growth this year with supply up
Zoopla expects UK house prices to increase slowly but steadily over the second half of 2024, on average increasing towards around 2% by the end of the year.
The improved outlook for the housing market is bolstered by an increased number of homes for sale – higher than at any point in the previous six years. This increased level of choice for buyers is supporting more sales going through.
More sellers naturally means more buyers who appear motivated by a range of reasons. In particular Zoopla is seeing that many would-be movers are upsizers – those looking for a larger home, usually to accommodate a growing family.
The data shows that more buyers are having to look further afield to get the home and features they are seeking. This is primarily down to affordability and value for money considerations.
Sales up 16% with buyers prepared to pay a greater percentage of asking price
The greater supply has resulted in the number of sales agreed being 16% higher than a year ago, with sales up across all regions and countries of the UK. Sales agreed are now 22% above pre-pandemic levels.
In addition, buyers are paying a greater proportion of the asking price than they were last year, when higher mortgage rates impacted demand. Buyers in the UK are currently paying 96.8% of the asking price – the highest figure for 18 months.
The figure is on a par with the longer-term average and points to continued house price growth. In pound terms, this equates to houses selling for an average of £16,600 below their asking price in June 2024.
No immediate impact from the new Government
Nothing in the King’s Speech or the new Government plans has had any material impact on the outlook for the market in the next 12-18 months. In the longer term, economic growth, rising household incomes and increased home building will benefit homebuyers and renters. The timing of the first base rate cut is important. It will deliver a boost to consumer confidence and market activity rather than leading to any major reduction in mortgage rates for new home buyers.
Mixed regional picture of growth ovr past 12 months
While growth over the last 12 months has been largely static (increasing by just 0.1%) the regional view shows more of a mixed picture, and somewhat of a north-south divide as affordability continues to be more of a constraint in southern England.
For example, while Belfast has seen a 4.3% increase (and Northern Ireland more widely a 3.9% increase) and Scotland has seen an overall increase of 1.4%, South East England saw a fall of -1%, South West England a drop of -0.7% and in the East of England, prices are down -1.2%.
Commenting on the latest report, Richard Donnell, Executive Director at Zoopla says: “The housing market is starting to hot up after a stone cold 2023. There are clear signs of growing confidence amongst buyers and sellers with many more homes for sale and buyers paying an increased proportion of the asking price. We expect to see more sales but house price inflation will be kept in check by more supply and affordability pressures keeping a lid on buying power, especially across southern England.
“While we don’t expect to see any impact from the new Government, or the King’s Speech specifically, in the next 12-18 months, it is possible we will in the longer term. The housing market is essentially an extension of the UK economy. Government policies focused on economic growth that feeds into income growth will help support both home buyers and renters. The Bank of England will have more impact on the market in the short term and much depends on the timing of the first base rate cut. .”
Simon Gerrard, Managing Director of Martyn Gerrard estate agents and past-president of the National Association of Estate Agents (NAEA Propertymark), said:
“It is little surprise that house price growth has levelled off in the year to June, but after an extended period of severe turbulence under the previous government, this is arguably no bad thing for the market. I think today’s house price growth figures probably reflect the transitional period that we’re in post-election, and that this is a brief stall, rather than a grinding halt, for the property market.
“There are several indicators promising a return to house price growth soon. Inflation has held steady at the Bank of England’s target of 2%, so there is a strong chance that the base interest rate will come down in August or September, which will fire the gun on property searches that have been on hold. From a wider perspective, it has also been of great relief to see the government prioritise building new homes. Supply is possibly the greatest challenge that the new government faces, and we will have to wait and see whether it can fulfil its promise to resolve this. Nonetheless, I am hopeful that this will be the case, and that the change in government ushers in a new era of sustainable, steady house price growth that is underpinned by a healthy flow of new homes being built.”
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