With the general election behind us and a greater sense of stability in the UK housing market, buyers and sellers are actively moving forwards across the country.
The property market has reached a level of balance not seen in five years, according to the latest report from Zoopla, with a surge of sellers taking the pressure off while demand for homes remains high, resulting in stable prices and fast transactions.
Zoopla has recorded annual price growth of 0.1% in its latest index, but with 96.8% of homes for sale achieving their asking price – which is up on last year’s figures and points to “continued house price inflation” says the report. This remains slightly lower in London and the south east though, where the figure is 96.3%.
One of the big jumps seen across the UK housing market in the latest figures is the number of sales agreed, which is up 16% compared with this time last year. There are now an average of 33 properties for sale with each agent, whereas the long run average is just 25.
This is down to a boost in supply with more sellers coming to the market, along with an ongoing stream of buyers looking to invest in UK bricks and mortar.
UK housing market remains firm favourite
House prices are driven by a number of factors, but one of the most significant is the balance between supply and demand, as with any commodity. In recent years, the dearth of houses for sale has led to bidding wars among buyers, particularly in certain parts of the market, pushing prices up.
However, although the number of homes for sale has spiked in the UK housing market, so too has the number of buyers – many of which are also sellers as part of a chain. This could include upsizers, downsizers, or those looking to relocate.
Economic factors, such as the mortgage market, also play a key role in buyer appetite and confidence. With mortgage rates now significantly higher than they were a couple of years ago, this has created a layer of difficulty for many would-be buyers – and would-be sellers as a result.
Yet Zoopla’s report notes that the UK housing market is adjusting to the “new normal” of 4%-plus mortgage rates, which is why momentum has continued to pick up over the course of the year.
Richard Donnell, Zoopla’s executive director – research, said: “The outlook for the housing market continues to improve with more sales and buyers paying a greater proportion of the asking price. The first base rate cut will boost market sentiment and market activity over H2.”
The north-south divide
The UK housing market has seen contrasting performance across the country, with most of the north of England showing a greater level of resilience than the south. This is largely down to the cost of borrowing alongside general affordability, both of which have affected the northern property markets to a lesser degree.
According to Zoopla, across the market as a whole, house prices are set to have risen by 2% by the end of this year. However, many parts of the north will experience price inflation well above this amount, whereas areas in the south may see a negative outcome overall.
Looking at the outlook for the UK housing market, Zoopla notes: “We expect continued modest growth in house prices, which will be greater outside the south of England where affordability is less of a constraint on price inflation. Sales remain on track for 1.1m in 2024, still 10% lower than the 20-year average.
“The timing of the first base rate cut is important. It will deliver a boost to consumer confidence and market activity rather than leading to any major reduction in mortgage rates for new home buyers.”
A positive outlook for the UK housing market
Nathan Emerson, CEO of Propertymark, said: “It is fantastic to see further positivity and confidence returning to the housing market, and now that the general election is out of the way and we have a promise of 1.5m new homes across the next parliamentary term, we should start to see even more confidence and affordability across the sector.
“It is vital that the new UK government takes supply issues seriously, as this will help stabilise house prices in the long-term. Propertymark is keen to see a ‘connected communities’ approach applied with the supply of new homes and one that delivers the right homes in the right areas at the right time, while paying extreme attention to ensuring available land is utilised ahead of any move on greenbelt areas.”
