The UK housing market has experienced a modest but consistent increase in prices throughout the first seven months of 2024, with overall house prices rising by 1.4%. Despite regional variances, the market shows signs of recovery and stability, driven by economic growth and improving consumer confidence. However, sellers are advised to price their properties realistically to avoid extended time on the market.
Key Market Trends
According to the latest Zoopla House Price Index, house prices across the UK have seen a year-on-year increase of 0.5%, with the average house price now standing at £266,400 as of July 2024. This marks a significant improvement compared to the latter half of 2023, which saw price declines due to higher mortgage rates. The market is projected to continue this upward trend, with house prices expected to be 2.5% higher by the end of the year.
The growth is not uniform across the country. London, which had previously struggled with negative price growth, has returned to positive territory with a 0.2% increase. Conversely, regions like the South East, South West, and East Midlands have experienced slight declines. Northern Ireland leads the way with a robust 5.1% increase in house prices, reflecting the varied impact of economic factors on different regions.
Rising Sales and Buyer Demand
Market activity has picked up considerably compared to 2023. Buyer demand has surged, up by 20% from the same period last year, while the number of new sales agreed has risen by 23%. This increase in activity is partly due to a more stable economic environment and a reduction in mortgage rates, with the average five-year fixed-rate mortgage at 75% loan-to-value now at 4.5%.
The supply of homes for sale has also increased, reaching a seven-year high of 33 homes per estate agent. This growing inventory provides buyers with more choices, which is likely to moderate price inflation through the remainder of 2024 and into 2025. However, the increased competition among sellers underscores the need for realistic pricing to achieve timely sales.
Impact of Base Rate Cuts
The recent base rate cut in August, while a positive development for the economy, has not had a significant impact on buyer demand beyond the existing trend. The spike in buyer interest following the rate reduction was modest, suggesting that broader economic factors, such as rising incomes and consumer confidence, are playing a more crucial role in driving the market.
Pricing Sensitivity Among Buyers
Despite the overall positive trend, buyer sensitivity to pricing remains high. Approximately 20% of homes listed for sale in August 2024 have had their asking prices reduced by 5% or more to attract buyers. Properties that are initially overpriced and subsequently reduced tend to take significantly longer to sell—73 days on average compared to 28 days for homes priced correctly from the outset.
This trend highlights the importance of strategic pricing, especially in a market where affordability remains a concern due to higher mortgage rates. Sellers who fail to price their homes competitively risk prolonged time on the market and may eventually need to accept lower offers.
Outlook for the Housing Market
Looking ahead, the UK housing market is expected to remain stable, with house prices continuing to rise modestly. The balance between supply and demand has improved, creating a more predictable market environment. While mortgage rates are likely to remain above 4%, this is not expected to hinder the market significantly, as rising household incomes continue to support home purchases.
Zoopla’s analysis suggests that the market is on track for 1.1 million sales in 2024, with house prices projected to increase by 2.5% by year-end. As the market adjusts to the new economic realities, sellers, buyers, and industry stakeholders can expect a more balanced and stable housing landscape moving into 2025.
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