Recent data from Zoopla has shown a remarkable surge in housing market activity, primarily driven by the lowest mortgage rates in several months. This change has reinvigorated buyer interest and increased sales across various regions in the UK, marking a notable shift in the property landscape.
According to Zoopla’s latest house price index (HPI) for September, buyer demand and agreed sales have risen by around 25% year-on-year. This significant increase follows a decrease in lending rates prompted by the Bank of England’s interest rate cut in August, which has made borrowing more affordable for many prospective homebuyers. However, despite this rise in activity, the report highlights that ongoing affordability constraints are still keeping house price growth subdued across the nation.
Regional trends indicate that the East Midlands and the North East are experiencing the most substantial increases in sales activity. The East Midlands has seen an impressive 32% increase in sales compared to the same period last year, while the North East has reported a 30% rise. Notably, all areas of the UK have experienced at least a 10% increase in the number of agreed sales, showcasing a widespread revival in the housing market.
This uptick in sales volumes has been further supported by an increase in the number of homes being brought to the market. Zoopla’s findings reveal that housing stock has increased by 12% annually, providing buyers with more options. The combination of improved affordability due to lower mortgage rates and greater availability of properties is contributing to a more dynamic and competitive housing market.
As buyer demand continues to grow, industry experts suggest that this could lead to shifts in market dynamics, potentially impacting both prices and availability in the months ahead. The current landscape appears to reflect a cautious optimism among buyers and sellers alike, as the market adapts to these recent changes.
The data indicated that seller confidence is showing signs of improvement, which is a positive development for the housing market. However, the statistics also highlighted that a notable percentage of the properties currently available for sale—approximately 13%—were previously rented out. This finding aligns with recent buy-to-let data from Rightmove, reinforcing the idea that some of these properties may have also functioned as second homes in the past. This trend may reflect a shift in the market as landlords and owners adjust to changing conditions and possibly seek to liquidate their investments amid economic uncertainties.
This update arrives as the housing market prepares for the forthcoming Budget announcement from Chancellor Rachel Reeves. The anticipation surrounding this announcement has led to increasing speculation regarding possible tax increases. Homeowners, particularly those with high-value properties, are reportedly taking proactive measures to safeguard their assets. There have been indications that these individuals are opting to sell their properties to avoid facing potential tax implications from the Treasury. This activity could further influence market dynamics, as it may lead to an influx of luxury properties hitting the market, potentially impacting pricing and buyer interest in that segment. As the market navigates these developments, many will be watching closely to see how the Budget will shape future trends in the housing sector.
Zoopla: sellers ‘returning to the housing market’ for first time in two years
The analysis from the property website indicates that many individuals are returning to the housing market for the first time since Liz Truss’s Mini Budget in September 2022. This fiscal announcement triggered a sharp increase in mortgage rates, creating a turbulent market that experienced two notable surges in rates. However, this volatility appears to have eased, with lending costs now considerably lower.
According to Zoopla, the average five-year fixed mortgage at a 75% loan-to-value ratio is currently at 4.3%, down from 5.5% a year ago. This marks the lowest rate since May 2023. Additionally, the Bank of England has suggested that interest rates may decrease more quickly than anticipated, combined with increased competition among lenders, which could lead to even cheaper mortgage options as winter approaches.
While these developments have attracted new buyers to the market, the analysis also highlights ongoing challenges for sellers. It notes that not all homes being listed are entirely new to the market; approximately 20% of the properties for sale have been listed previously within the last two years. Furthermore, an additional 20% of these homes have remained on the market for over six months, indicating that it continues to be a buyer’s market.
Zoopla has indicated that there may be an increase in housing stock over the next few months if the predictions regarding potential tax hikes in the upcoming Budget are accurate. The data reveals that 32% of properties currently on the market are chain-free, suggesting that many of these homes were previously used as second residences.
Additionally, there has been a noticeable rise in new listings in popular second-home destinations. Postcodes in Bournemouth, Exeter, Lincoln, Torquay, and Truro have experienced a surge of over 40% in the number of homes available compared to the seasonal average. This influx of supply has led to a decline in house price growth in these areas. Zoopla attributes this shift, in part, to plans to double council tax on second homes in various English local authority areas starting in 2025.
Supply increase to keep house prices in check, Zoopla says
According to Zoopla, UK house prices increased by 0.7% over the year ending in August 2024, bringing the average price to £267,100. The rise in sales activity has contributed to this growth, but the company anticipates that the increasing number of homes on the market will help keep house price inflation in check in the coming months.
Northern Ireland recorded the highest annual price increase, with home values rising by 5.7%. Scotland followed with a growth rate of 2.2%, while the North West saw a 2.1% increase.
In London, house prices grew by 0.5% year-on-year. However, the rest of the South of England experienced declines. The East of England recorded a decrease of 0.9%, while the South West and South East saw smaller drops of 0.3% and 0.2%, respectively.
At the city level, Belfast led the way with a 5.1% increase in house prices over the past year. Manchester and Liverpool also saw notable growth at 2.3% and 2%, respectively. Conversely, Portsmouth and Aberdeen experienced the largest declines, each with a decrease of 1%. Across the 20 cities analysed by Zoopla, the average property price was £307,100, reflecting a year-on-year increase of 0.8%.
Is now a good time to sell my house?
Despite signs of improved market confidence, Zoopla has indicated that sellers may still need to make concessions when listing their properties. The company found that in September, 18% of homes for sale had to reduce their asking prices by 5% or more to attract buyers.
Richard Donnell, executive director at Zoopla, noted that lower mortgage rates are helping to restore confidence among homeowners, many of whom have been hesitant to engage in the market over the past two years. He stated, “Market activity is up across the board, and expectations of lower borrowing costs will continue to draw both buyers and sellers into the market. Speculation regarding potential tax changes in the upcoming Budget, along with the effects of previous tax adjustments, is contributing to the increase in the number of homes for sale. We remain in a buyer’s market, and the greater selection of available homes will help keep house price inflation under control into 2025.”
Zoopla also advised sellers to set realistic expectations regarding pricing if they wish to make a timely sale. While the outlook is more optimistic compared to a year ago, there remains uncertainty about future interest rates, particularly in light of global events, such as the ongoing conflict in the Middle East. Currently, Zoopla anticipates that mortgage rates will stabilise between 3.5% and 4.5% in the New Year, which should support healthy sales volumes.
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