The average price of a UK home reached £266,400 in July, as reported by Zoopla. This represents a 1.4% increase over the first seven months of the year, adding £3,600 to the value of the typical home since January. The growth is a noticeable improvement compared to the same period in 2023, when house prices saw only a minimal rise of 0.1%.
Zoopla’s data highlights a steady recovery in the housing market, reflecting the gradual shift in buyer confidence and market stability despite ongoing economic challenges. This increase in house prices suggests that the demand for homes remains strong, with many buyers still active in the market, albeit with caution due to the prevailing economic conditions.
Looking ahead, Zoopla predicts that house prices will continue to climb throughout the year, with a projected 2.5% increase by the end of 2024. This forecast indicates a cautiously optimistic outlook for the property market, as buyers and sellers navigate fluctuating interest rates and economic uncertainty.
Buyer demand saw a decline during the summer of 2023, largely due to the sharp increase in mortgage rates. This factor played a significant role in the year-on-year rise in property prices seen last month. With the housing market experiencing these shifts, the supply of homes for sale has now reached its highest level in seven years. This surge in available properties has provided buyers with more options, and Zoopla forecasts that this increased selection will help keep house price inflation under control through the rest of 2024 and into 2025.
Zoopla also issued a caution to sellers, noting that the record levels of supply mean that careful pricing is essential. Homes that require a reduction in their asking price take more than twice as long to sell compared to those priced correctly from the start. In August, one in five sellers reduced their asking price by 5% or more in an effort to draw in potential buyers, a move that underscores the importance of setting realistic prices in today’s market.
Additionally, the platform highlighted the growing challenge for sellers as more properties enter the market. Sellers who initially overprice their homes face longer waits, with sales often dragging on or even falling through. The increased competition among sellers, coupled with a more cautious approach from buyers, signals a shift towards a more balanced market, where careful pricing strategies will be key to securing successful sales.
Richard Donnell, executive director at Zoopla, highlighted that momentum in the property market is picking up as mortgage rates slowly decline. This gradual drop in rates has provided more confidence to sellers, leading to an increase in the number of homes being listed for sale. The current market conditions are encouraging more activity, but this comes with new challenges.
Donnell also emphasised that the purchasing power of buyers has weakened compared to two or three years ago. With higher living costs and tighter budgets, buyers are becoming increasingly price-sensitive. This means that sellers cannot afford to be overly ambitious when setting the price for their homes. Overpricing in today’s market could result in properties lingering unsold for longer periods, as buyers are more cautious and have a wider range of options to choose from.
Therefore, it’s crucial for sellers to strike the right balance in pricing to attract serious buyers and secure timely sales.
Sarah Coles, head of personal finance at Hargreaves Lansdown, issued a warning to homeowners about the potential pitfalls of overpricing their properties. She emphasised that the current market offers buyers an abundance of choices, which can work against sellers who set their prices too high. With house prices still elevated and mortgage rates not offering much relief, buyers are becoming more cautious, particularly when faced with higher-priced properties. This environment means that overpriced homes are more likely to be passed over in favour of more reasonably priced alternatives.
Coles further explained that the combination of high property prices and stretched buyer budgets makes the market challenging. Buyers are facing financial pressure, and they will quickly dismiss homes that they perceive as being too expensive. Sellers need to be realistic about their pricing strategies if they want to generate interest in their properties. In today’s market, being competitive with pricing is essential to securing a sale.
Regionally, the housing market has seen varying trends. Belfast led the way with the largest year-on-year increase in house prices in July, with a significant rise of 5.1%, pushing the average home price to £176,700. Manchester followed closely behind, experiencing a 2% increase, bringing the average house price to £226,600. On the other hand, London’s property market saw only a modest increase of 0.2%. Despite this minimal growth, the average cost of a home in London remained substantially higher than the national average, standing at £536,300. This regional variation highlights the diverse nature of the UK housing market, where some areas continue to see strong growth, while others experience more subdued changes.
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