UK’s housing market shows resilience as sales surge

UK’s housing market shows resilience as sales surge

0:07 AM, 29th February 2024, About 2 months ago

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The UK’s housing market has demonstrated remarkable resilience, defying price trends and continuing its upward trajectory, one house price index reveals.

Property website Zoopla says it is forecasting a substantial 10% surge in total home sales this year, reaching 1.1 million transactions compared to the 1 million recorded in 2023.

Its latest House Price Index reveals several key indicators that contribute to this robust performance – including the number of homes available for sale increasing by a fifth (21%).

Also, buyer demand has risen by 11%, and crucially, sales agreements have surged by 15% compared to the same time last year.

These figures, Zoopla says, reflect growing buyer confidence and a more pragmatic approach to pricing by sellers.

‘Housing market has proved very resilient’

Richard Donnell, the executive director at Zoopla, said: “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.”

He added: “The momentum in new sales being agreed has been building for the last five months and the sales market is on track for 1.1m sales over 2024 supported by new sellers coming to the market.”

He adds: “While sales are set to increase, we don’t expect house price growth to accelerate further in 2024.”

Two regions are leading the rebound

Leading the rebound in sales are two regions: the North East, with a remarkable 17% increase, and London, which has seen a substantial 16% rise.

The capital city’s housing market, often distinct from the rest of southern England, has shown remarkable resilience.

Despite the overall positive trend, the rate of house price inflation across the UK has slowed to -0.5%, a notable improvement from the low of -1.4% recorded last October.

This deceleration in house price declines is consistent across all regions.

Five English regions continue to experience annual price falls

However, five English regions continue to experience annual price falls of up to -2.1%, the remaining four regions of England, along with Wales, Scotland, and Northern Ireland, have entered positive territory, with an annual price inflation rate of 4.3%.

The firmer pricing of homes underscores the point that house prices do not necessarily need to fall to support sales.

Estate agents are now agreeing to an average of six new sales per month, compared to 5.2 during the same period last year.

A critical factor impacting home costs

Location remains a critical factor impacting home costs and the UK’s housing market is operating at three distinct speeds:

  • Southern England: Encompassing the Eastern, South East, and South West regions (excluding London), these areas have witnessed the most significant annual price declines. Rising mortgage rates and reduced household buyer power have contributed to this trend. The average home price in these regions stands at £344,000, a substantial £80,800 (30%) above the UK average.
  • London: The capital city’s housing market behaves differently from the rest of southern England. Despite challenges, London’s property market remains dynamic, reflecting its unique position as a global financial hub.
  • Rest of the UK: House price growth has slowed over the last 12 months with price falls at or below the UK average. The impact of higher mortgage rates on buying power has been less pronounced.

‘New life we saw breathed into the market’

Sarah Coles, the head of personal finance at Hargreaves Lansdown, said: “February sustained the new life we saw breathed into the market at the start of the year, with some buyers and sellers returning to the market, and sales picking up again.

“However, while this is much-needed good news for sellers, it’s worth highlighting that prices are dropping, asking prices are being cut, and the market faces some serious hurdles.”

She added: “The picture varies a great deal across the country. Unfortunately for many, it’s still grim down south.

“In the south, excluding London, we’re seeing the impact of relentless eye-watering price rises over the past few years.

“As a result, affordability is a major problem, and we’re still seeing asking prices drop significantly.”

‘Buyer confidence has returned’

Nigel Bishop, of buying agency Recoco Property Search, said: “We have seen first-hand that buyer confidence has returned to some degree, particularly compared to this time last year.

“This uplift in market activity is largely driven by the availability of more affordable mortgage products.”

He adds: “Equally, sellers have become more motivated to put their property up for sale which is resulting in buyers having a larger pool of properties to choose from.”

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