Housing market momentum continues to grow with additional 10% more home sales expected in 2024
Increased sales market activity predicted to continue with 1.1m home sales expected in 2024 versus 1 million in 2023
Improving market conditions attracting more sellers with 21% more number of homes for sale than a year ago
Buyer demand 11% higher, with sales agreed also 15% higher than 2023
Activity boosted by falling mortgage rates which are starting to plateau
Estate agents agreeing six new sales a month, versus 5.2 this time last year
Annual UK house price inflation moderates to -0.5% from a low of -1.4% in Oct-2023
Seven UK regions and countries recording positive house price inflation, with five regions recording negative inflation
Latest report identifies a ‘three-speed’ housing market split between southern England, London and the rest of the UK explained by differences in the affordability of house prices
UNDER EMBARGO UNTIL 00.01 THURSDAY 29TH FEBRUARY 2024, LONDON: The rebound in housing market activity registered at the start of the year has continued, with property website Zoopla predicting a 10% increase of total home sales (1.1 million) in 2024 vs 1 million in 2023.
The latest Zoopla House Price Index shows that the number of homes for sale are a fifth (21%) higher than a year ago, with buyer demand also up 11% and - crucially - sales agreed 15% higher than this time last year: evidence of greater buyer confidence and more realism on pricing by sellers. The North East (+17%) and London (+16%) have led the rebound in sales.
Rate of house price falls slow on rising sales
The UK rate of house price inflation has slowed to -0.5%, up from a low of -1.4% in October 2023. Slowing house price falls is a trend recorded across all regions of the UK. Five English regions are still registering annual price falls of up to -2.1%, with house price growth now in positive territory across the remaining four regions of England, as well as Wales, Scotland and Northern Ireland where annual price inflation is 4.3%.
Firmer pricing of homes is evidence that house prices do not need to fall to support sales: supported by the fact estate agents are agreeing an average of six new sales a month, versus 5.2 this time last year.
A three-speed housing market
There are tangible impacts on the cost of a home depending on location, and this is contributing to a ‘three-speed’ housing market across the UK.
1) Southern England regions – covering the Eastern, South East and South West regions, outside London, these areas have registered the largest annual price falls. Rising mortgage rates and reduced household buyer power have hit these markets with the average home price at £344,000 - an increase of £80,800, or 30% above the UK average.
2) London – London performs differently to the rest of southern England. While it is the most expensive housing market, with an average price of £534,000, it is a market that has registered much lower levels of house price inflation over the last seven years. Affordability has been improving slowly over this time opening the market up to more potential buyers than before. The rebound in demand and low growth in the available supply of homes for sale (just 7% higher v 21% for the UK) explains why the annual rate of price inflation is improving more quickly than the southern England regions.
3) Rest of the UK – while house price growth has slowed rapidly over the last 12 months, annual price falls have been very limited across the rest of the UK where house prices are at or below the UK average. The impact on buying power from higher mortgage rates has been less pronounced.
Three Tier Market
Area | Average Price | % UK Average | Price difference to UK |
|---|---|---|---|
London | £534,600 | 103% | £271,000 |
Southern England | £344,400 | 31% | £80,800 |
Rest of UK | £188,600 | -28% | -£75,000 |
UK | £263,600 |
Regions
Area | Average Price | % UK Average | Price difference to UK |
|---|---|---|---|
North East | £140,300 | -47% | -£123,300 |
Scotland | £162,600 | -38% | -£101,100 |
Northern Ireland | £166,900 | -37% | -£96,700 |
Yorkshire & The Humber | £185,400 | -30% | -£78,200 |
North West | £193,900 | -26% | -£69,700 |
Wales | £203,100 | -23% | -£60,500 |
East Midlands | £227,400 | -14% | -£36,200 |
West Midlands | £228,600 | -13% | -£35,000 |
South West | £312,000 | 18% | £48,400 |
Eastern | £336,500 | 28% | £72,900 |
South East | £384,500 | 46% | £120,900 |
Source: Zoopla House Price Index
What’s next for mortgage rates?
Falling mortgage rates have supported the upturn in activity along with faster growth in household incomes. Mortgage rates are back to where they were a year ago with lenders now pulling mortgage deals priced below 4% as the cost of finance used to fund mortgages has increased modestly in recent weeks. Buyers should anticipate 4-5% mortgage rates over much of 2024 with mortgage rates in the 4-5% range consistent with flat to low single digit price rises.
Commenting on the latest report, Richard Donnell, Executive Director at Zoopla says: “The housing market has proved very resilient to higher mortgage rates and cost of living pressures. More sales and more sellers shows growing confidence amongst households and evidence that 4-5% mortgage rates are not a barrier to improving market conditions.
The momentum in new sales being agreed has been building for the last 5 months and the sales market is on track for 1.1m sales over 2024 supported by new sellers coming to the market. While sales are set to increase we don’t expect house price growth to accelerate further in 2024. ”
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