A recent analysis by Zoopla shows that approximately one in eight homes currently for sale were previously used as rental properties. This figure stands at 12% and has remained consistent over the past three years.
According to Zoopla, several factors have influenced this trend. Changes in tax regulations introduced in 2016, along with higher mortgage rates and increased regulation in the rental sector, have prompted many landlords to sell their properties. Despite this, a significant portion of these homes, about 40%, do not leave the rental market entirely. Instead, they continue to be rented out, either because they are purchased by new landlords or because the current owners decide to keep them as rental properties.Â
This pattern reflects ongoing shifts in the property market, where regulatory and financial pressures are leading to more rental properties being sold, yet a notable proportion of these continue to serve as rentals.
In its most recent market snapshot, Zoopla has reported significant changes in the housing market due to the impact of mortgage rates, which have now risen above 4%. This adjustment has resulted in increased market activity rather than an immediate surge in house prices. The current market environment is characterised by a steady rise in the number of homes being listed for sale, alongside a higher volume of sales being successfully agreed upon. This shift indicates that both sellers and buyers are becoming more active in the market, responding to the changing financial landscape.
Furthermore, buyers are showing greater confidence in the market. This is evident from their willingness to pay a larger proportion of the asking price. The increased confidence among buyers reflects a positive shift in market sentiment and suggests that potential homeowners are more prepared to engage in transactions despite the higher cost of borrowing.
Over the past 12 months, house prices have largely remained stable, with little significant movement. This period of relative price stability reflects the market’s ongoing adjustment to the new higher mortgage rates. It has also allowed for a more gradual recalibration of market expectations.
However, the first half of 2024 has seen a shift, with house prices across the UK starting to show an upward trend. This change suggests a gradual recovery and an increase in demand. The upward movement in prices indicates that the market is beginning to rebound as confidence improves and economic conditions adjust.
Looking ahead, Zoopla forecasts that house prices could end 2024 up to 2% higher on average compared to current levels. This projection points to a continued gradual recovery in the housing market, despite the ongoing challenges posed by elevated mortgage rates. The expected increase in house prices highlights a resilient market adapting to the new economic conditions and an optimistic outlook for the remainder of the year.
The number of homes available for sale has risen significantly, with current supply levels now 16% higher than a year ago. On average, estate agents are listing around 33 properties each, indicating a notable increase in market inventory. This growth in supply is contributing to a more balanced market, where buyers have more options and sellers face increased competition.
As a result of the larger supply, sales activity has also picked up. The increase in available homes is supporting higher sales volumes and putting a brake on rapid price inflation. The added choice allows buyers to make more informed decisions, which in turn stabilizes price growth in the market.
In addition to the rise in supply, buyers are now paying a larger portion of the asking price. The average proportion of the asking price paid by buyers has reached 96.8%. This figure represents a recovery from earlier trends and indicates improved buyer confidence and willingness to meet seller expectations.
The recovery in the proportion of the asking price paid is particularly evident in regions such as London and the South East. These areas have seen the most significant improvements, reflecting stronger demand and a more resilient property market.
Overall, the combination of increased supply and higher sale prices paid by buyers is helping to stabilize the housing market. The ongoing adjustments in market dynamics are providing a clearer picture of current conditions and influencing both buyer and seller behaviour.