The most recent House Price Index from Zoopla indicates that 2024 could be a strong year for house sales.
Increased incomes and the lowest average mortgage rates in two years have led to the highest number of new sales since late 2020.
In contrast, house prices have seen a modest increase of just 1% over the past year, compared to a decline of 0.9% the previous year. Price growth is being limited by a wide selection of homes available and affordability issues, which are restraining buying power.
In more affordable regions of the UK, house prices are experiencing notable increases, outpacing the national average. For example, the North-East and Yorkshire & Humberside both reported a 2% rise in house prices, while the North-West saw a slightly higher increase of 2.3%. Scotland is also showing positive trends with a 2.4% rise, and Northern Ireland stands out with an impressive increase of 5.6%.
Conversely, certain areas are experiencing a slight decline in house prices. Eastern England has seen a decrease of 0.3%, while the South-East has faced a marginal drop of 0.1%.
Looking at the broader picture, UK-wide average house prices are projected to rise by 2% over the course of 2024. This forecast is supported by the fact that the price declines experienced during this time last year will soon drop out of the annual rate of price inflation, creating a more favourable environment for price increases.
Moreover, the sustained growth in new sales throughout 2024 has led to a robust sales pipeline, marking the largest volume the market has seen in four years. This surge in activity indicates a potentially strong recovery in the housing market, as buyers take advantage of the current conditions and new opportunities arise.
Zoopla’s latest analysis indicates that there are currently 306,000 homes progressing through the buying process, marking an increase of 62,250 properties, or 26%, compared to the same period last year. This surge in activity has resulted in the total value of these sales reaching an impressive £113 billion. This figure is a significant 30% higher than the corresponding time last year when a spike in mortgage rates adversely affected buyer demand and led to a notable decline in the number of sales agreed during the second half of 2023.
The momentum in new sales is not only strong but also shows signs of continuing into December. This sustained activity is largely supported by a robust supply of homes available for sale, which has improved the overall market dynamics. Many of the recent transactions are expected to reach completion in the first half of 2025, highlighting the ongoing demand for housing and the effectiveness of current market conditions in facilitating sales.
The growth in sales can be attributed to a combination of factors, particularly the influx of first-time buyers (FTBs) and existing homeowners who have been waiting to make their moves until borrowing costs decreased and the overall outlook for the housing market improved. In fact, FTBs are projected to become the largest buyer cohort in 2024, anticipated to account for 36% of all sales. Following them are existing homeowners, who are expected to make up 31% of sales, while cash buyers are projected to account for 27%, and landlords purchasing with a mortgage are expected to represent 7% of the market.
This diverse mix of buyers is indicative of a stabilising market where various segments are actively engaging in property transactions, contributing to an optimistic outlook for the housing market in the coming months. As the market continues to adapt to changing conditions, these trends suggest a potentially vibrant year ahead for house sales.
According to the portal, the rapid increase in rents, coupled with declining mortgage rates, has altered the dynamics between renting and buying, making homeownership more accessible for first-time buyers. Currently, the average mortgage repayment for a typical UK first-time buyer (FTB) home is 17% lower than the cost of renting. This contrasts sharply with just a year ago, when the difference was only 2% due to higher mortgage rates.
Richard Donnell, executive director at Zoopla, stated, “It is encouraging to see the ongoing rise in sales activity in 2024, which indicates increasing confidence among buyers and sellers, driven by lower borrowing costs and higher incomes. Overall, the market is on track for a modest 2% price increase in 2024, with around 1.1 million sales expected.”
Donnell added, “While first-time buyer numbers have rebounded as mortgage rates have dropped, a significant deposit is still required for purchasing. Potential changes to stamp duty relief could create additional barriers for this group, which already faces substantial affordability challenges.”
He emphasised that the housing market does not need short-term policy changes from the Budget. The overall health of the housing market and people’s ability to afford homes is closely tied to the economy’s performance. It is crucial for the Budget to prioritise economic growth, job expansion, and rising incomes. The main focus should be on providing the necessary financial support and investment to build the homes the nation needs for both buyers and renters.
Download NOW
4 Simple Steps To Becoming Wealthy Through Property