10:49 AM, 5th April 2023, About 11 months ago
Demand for homes in the UK is at the highest since last October as a strong labour market and falling mortgage rates help to support buyer interest, a report from Zoopla says.
The platform points out that the market is experiencing ‘soft repricing’ and that annual house price inflation has slowed to 4.1%, with prices 1% lower than last October.
The market’s conditions are also much better in the first quarter of the year than many had expected – with sellers and buyers striking deals at an increasing rate.
Zoopla is expecting 500,000 sales to be completed in the first six months – and then onto one million property sales – or more – for the year.
The firm also says that high rental inflation is supporting first-time buyer demand.
Richard Donnell, the executive director of research, said: “All areas are registering an improvement in market conditions with some areas doing better than others.
“We continue to register above-average demand for housing in the most affordable areas led by Scotland, Wales, the North East of England and London.
“Demand is weaker in regions where prices jumped the most over the pandemic and where prices are higher than the national average.”
He added: “We believe that first time buyer numbers will continue to hold up this year as would-be buyers seek smaller homes and better value for money.
“Mortgage repayments are below rental costs in many regions at 4% mortgage rates so getting a deposit will remain the big hurdle.”
Sarah Coles, the head of personal finance at Hargreaves Lansdown said: “Zoopla has spotted green shoots in the property market, but at this stage we can’t rule out a lethal frost.
“There are no guarantees that the spring is set for the kind of flourishing market the estate agents are hoping for.”
She added: “There are some real positives, with more sellers coming to the market, which is enabling a reasonably steady stream of sales.
“Bank of England figures have also shown that mortgage approvals for the coming months have picked up very slightly, and, assuming the current bump in mortgage rates is a temporary blip, the market could benefit from further falls in rates.
“Meanwhile, the strength in the labour market and rapidly rising rents are keeping a floor under demand.”
Emma Cox, the managing director of real estate at Shawbrook, said: “As house price growth slowed in March, we are yet to see the predicted bounce-back as the economy continues to battle high-inflationary pressures.
“With uncertainty still the order of the day, it is clear why sellers and buyers alike are hesitant to progress with their property plans.”
She adds: “Yet the picture is not all doom and gloom.
“Many property investors are making the most of the current slowdown to add to their portfolios and inject much-needed supply into the rental market.
“Yield will be important for investors with many looking to diversify location and property type.
“For example, properties such as Houses in Multiple Occupation (HMOs) are looking particularly favourable for those investors with the appetite and experience to explore the more complex end of the market.”