Just like the recent balmy temperatures, the UK’s property market is hotting up, according to Zoopla’s latest House Price Index. The researchers predict a positive second half of the year, with market activity surging while property prices rise at a more modest pace.
The property market is continuing to adjust to 4+ per cent mortgages with encouraging signs of increased activity reported, according to the index. House prices have risen by a modest 0.1 per cent over the past 12 months, bringing the average property price to £265,600, with growth seen across all regions of the UK in the first half of 2024.
Positive signs for growth with increased supply
Zoopla’s experts forecast a slow but steady increase in UK house prices over the second half of 2024 of around 2 per cent by year-end. This optimistic outlook is underpinned by a substantial increase in the number of properties for sale, the highest level in the past six years, leading to more transactions.
The increase in supply has resulted in more buyers, who appear driven by various motives including upsizers seeking larger homes to accommodate growing families. The data also indicates that more buyers are looking further afield to find the features and affordability they desire.
Sales up 16 per cent with buyers paying a higher percentage of asking price
The increased supply has led to a 16 per cent rise in the number of sales agreed compared to a year ago, with growth observed across all regions and countries of the UK. Sales agreed are now 22 per cent above pre-pandemic levels. Furthermore, buyers are paying a higher proportion (96.8%) of the asking price than last year meaning properties sold for an average of just £16,600 below their asking price in June 2024. Zoopla’s researchers say this percentage aligns with the longer-term average, suggesting ongoing house price growth.
No immediate impact from the new government
The recent King’s Speech and new Government plans have not significantly influenced the market outlook for the next 12-18 months, according to Zoopla. In the longer term, economic growth, rising household incomes and increased home building are expected to benefit both homebuyers and renters. The first base rate cut, reduced to 5 per cent by the Bank of England last week, is predicted to boost consumer confidence and market activity rather than significantly reduce mortgage rates for new homebuyers.
Mixed regional picture of growth over the past 12 months
While overall growth has been largely static, with a mere 0.1 per cent increase, the regional analysis reveals a more varied scenario, highlighting a north-south divide where affordability remains a significant constraint in southern England.
For instance, Belfast has experienced a 4.3 per cent rise and Northern Ireland has seen a 3.9 per cent increase overall. Scotland has also seen a 1.4 per cent rise. Conversely, South East England experienced a -1 per cent decline, South West England dropped by -0.7 per cent, and the East of England saw a -1.2 per cent decrease.
Richard Donnell, Executive Director at Zoopla, commented: “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.”
Simon Gerrard, Managing Director of Martyn Gerrard estate agents and past president of the National Association of Estate Agents (NAEA Propertymark), added: “There are several indicators promising a return to house price growth soon. 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.”
