Zoopla reports that house prices are projected to end 2024 approximately 2.5% higher than at the start of the year. This is a more optimistic outlook compared to earlier forecasts, which had predicted a 2% decrease in prices for the year. The latest data suggests a positive trend in the housing market.

In the first seven months of 2024, house prices have increased by 1.4%, which is a significant improvement compared to the 0.1% rise during the same period last year. This upward movement is attributed to the recent decline in mortgage rates, which is boosting activity and demand in the housing market.

Despite this positive trend, Zoopla advises sellers not to set their asking prices too high. Overpricing could deter potential buyers and hinder the selling process. The key to success in the current market is to set realistic prices that reflect the improved but still cautious market conditions.

Zoopla reports that the number of buyers looking for homes has increased by 20% compared to last year, thanks to some buyers now securing five-year fixed-rate mortgages below 4%. This is a significant drop from last year, when the lowest rates for five-year fixed mortgages were above 5.25%.

This rise in buyer activity has led to a 23% increase in sales agreed compared to the previous year. Despite this growth, the market still faces challenges. A high number of homes on the market and mortgage rates that remain above previous levels are keeping price growth in check.

Sellers are advised to be cautious with their asking prices. In August, around 20% of sellers had to reduce their asking price by 5% or more to attract buyers.

Zoopla reports that the number of homes on the market has reached its highest level in seven years, with the average estate agent now listing 33 properties for sale. This indicates that the market is still favourable for buyers.

Currently, one in five sellers is reducing their asking price by at least 5%, and homes that are priced too high are taking more than twice as long to sell. 

Zoopla’s experts anticipate that the increased number of available properties will help keep house price inflation under control through 2024 and into 2025.

Zoopla has reported that the number of homes available for sale has reached its highest level in seven years, with each estate agent now managing an average of 33 properties. 

This indicates that the market remains favourable to buyers. 

Currently, one in five sellers is reducing their asking price by at least 5%, and homes that are priced too high are taking more than twice as long to sell. 

Zoopla’s experts believe that the increased inventory will help keep house price inflation stable through 2024 and into 2025.

Mortgage rates make buyers seek a bargain

House prices are slowly increasing, but buyers are still cautious due to high mortgage rates. 

Although income growth is helping to improve affordability, it has not yet fully recovered, according to Zoopla. 

This situation is why one in five homes had their asking prices reduced by at least 5% in August to attract more buyers.

Homes with reduced asking prices are taking more than twice as long to sell compared to those priced correctly from the start.

Properties that have been discounted are also twice as likely to experience failed sales and are more likely to remain unsold altogether, according to a five-year analysis by Rightmove.

Similar to Zoopla, Rightmove reports that many sellers are still asking for more than their homes are worth. 

Richard Donnell of Zoopla notes that it typically takes around 28 days to agree on a sale when the asking price is not reduced. In contrast, homes with a price cut of 5% or more take an average of 73 days to sell.

Donnell emphasizes that setting the right asking price from the beginning is crucial for sellers to achieve a timely sale. A price reduction of 5% or more significantly extends the time required to sell a property and may result in it not selling at all.

North-South house price divide continues 

According to Zoopla, house prices have generally improved across most parts of the UK this year. 

However, there is a notable North-South divide. Prices in the North have increased, while some regions in the South have seen declines. 

In the 12 months leading up to July, house prices rose in eight regions but fell in four. Specifically, average prices are down 0.9% in the East of England, 0.7% in the South East, and 0.6% in the South West. London and the East Midlands have seen nearly flat prices compared to a year ago.

In lower-value and more affordable housing markets, especially near major cities in England, prices are rising faster than the national average. For example, prices in Wolverhampton have increased by 3%, 2.8% in Oldham, and 2.7% in Wakefield.

In Scotland, the rise is even more pronounced. Prices in Dumfries and Galloway are up 4.4%, while Galashiels and Falkirk have both seen a 3.1% increase.

What next for house prices?

Zoopla is not the only firm predicting that house prices will rise by the end of the year.

Knight Frank is also forecasting an increase in house prices. Tom Bill, head of UK residential research at Knight Frank, explained that buyer demand is expected to grow as mortgage rates decline. 

He noted that as inflation is brought under control and more mortgages with rates below 4% become available, a further rate cut before Christmas is anticipated. Bill expects UK house prices to rise by 3% this year.

However, he also warned that financial challenges will persist as buyers and sellers transition from previously favourable rates, and uncertainty surrounding October’s Budget could limit significant price increases.

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