There has been a significant increase in the number of homes for sale, with listings up by 20% compared to this time last year. This surge in supply is a notable shift in the housing market, reflecting changing dynamics among property owners and potential buyers.
Zoopla, the organisation behind these figures, warns that this substantial increase in available properties is likely to keep capital appreciation muted this year. The market’s growth in supply, now reaching an eight-year high, signals a shift in homeowner behaviour and market confidence.
The rise in supply has been largely driven by a rebound in the number of three and four-plus bedroom homes for sale. Many existing owners are returning to the market, feeling more confident about their ability to move and upgrade their living situations. This trend suggests a renewed optimism among homeowners, contributing to the growing inventory of available properties.
On average, estate agents now have 31 properties for sale per office, compared to 26 properties at the same time last year. This increase in listings per agent indicates a more active market, with a greater variety of homes available for potential buyers. The broader selection may provide buyers with more options but could also lead to longer selling times and more competition among sellers.
As the housing market adjusts to this influx of properties, the overall impact on prices and sales activity will become clearer. For now, the increased supply is a key factor to watch, as it shapes the market dynamics and influences the strategies of both buyers and sellers in the coming months.
While most homes for sale are new to the market, 31% of them were originally listed in 2023. Rising mortgage rates had previously weakened demand, but now homeowners are returning to the market, seeking to move.
This increase in the supply of homes for sale boosts choice for buyers and is expected to keep house price growth in check for the rest of 2024. Although sales agreed are up 13% year on year, the growth in new homes for sale is outpacing the growth in the number of sales agreed across most regions.
Zoopla notes that the South West has experienced well above average growth in the number of homes for sale. This region stands out due to its significant increase in housing supply, which further contributes to the overall market trends.
As more properties come onto the market, buyers have more options, but this also means sellers may face more competition. This dynamic is likely to influence pricing strategies and the speed at which homes are sold.
Overall, the housing market is seeing a shift, with increased supply providing more opportunities for buyers and potentially stabilising prices in the near term.
There are a third more homes for sale compared to this time last year. Tax and planning changes for holiday lets and the prospect of double council tax for second homes are likely to further increase the number of homes for sale, particularly in regions with high levels of second home ownership.
The general election in early July is expected to have a modest impact on housing market activity. Currently, there are 392,000 homes in the sales pipeline expected to complete in 2024. An increase in fall-throughs is unlikely due to the election, as there isn’t a significant policy divide between the two main parties.
Some buyers early in the home buying process may delay decisions due to the election, but the underlying motivations to move remain strong for others. These buyers are likely to continue their search and secure a sale in 2024.
The pace at which sales are being agreed is likely to slow in the coming weeks, which could mean the total number of sales for 2024 drops below 1.1 million. Despite this, the market continues to be driven by strong motivations among buyers looking to move.
The north and south divide in annual house price growth persists, with modest price declines across Southern England. This split is most notable at the city level, with the strongest growth in Belfast (+3.6%), Burnley (+2.5%), and Bolton (+2.4%), and the largest declines in Ipswich (-3%), Hastings (-2.7%), and Norwich (-2.4%).
The variation in house price growth is mainly due to affordability pressures amid higher mortgage rates. In Southern England, price falls are concentrated in coastal cities and areas where prices surged during the pandemic’s ‘race for space’ but now face weaker demand. Conversely, house prices are rising in cities with below-average prices where the impact of higher mortgage rates is less significant.
Zoopla expects this north/south divide in house price growth to persist through 2024 as incomes and house prices realign across the country. Richard Donnell, executive director at Zoopla, comments: “The growth in the supply of homes for sale indicates renewed confidence among homeowners, some of whom postponed moving decisions in 2023. The quarterly rate of house price inflation has increased recently as more sales are agreed and prices stabilize. The upcoming election will likely slow the pace of new sales, while greater buyer choice will keep prices in check. Those serious about moving in 2024 should price their homes realistically to secure a sale.”
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