1.1 million transactions predicted for the year
Increased home listings and rising buyer confidence are contributing to a 12% surge in sales agreements compared to last year, according to property website Zoopla.
Its latest monthly House Price Index indicates that UK house price growth remains essentially stable at -0.2%, fostering a more balanced housing market.
Zoopla anticipates a significant increase in home sales, predicting 1.1 million transactions in 2024 compared to 1 million in 2023, contingent on sellers maintaining realistic pricing expectations.
February 2024 also saw a 32% spike in mortgage approvals for home purchases, reaching levels not seen since before the pandemic. Despite this positive trend, the average mortgage rate holds steady at about 4.5%, up from below 2% in March 2021, escalating affordability challenges for buyers and tempering house price inflation.
Homebuyers with a 70% loan-to-value mortgage now face annual payments 61% higher than three years prior, an increase from £7,100 to £11,400. Two-thirds of this rise is attributed to elevated mortgage rates, with the remainder due to a 13% increase in house prices since March 2021.
Regionally, the impact varies significantly, with the south west, south east, and east of England experiencing annual mortgage repayment increases exceeding £5,000. London buyers face the steepest rise, with an additional £7,500 annually. Other UK regions see more moderate increases, ranging between £2,350 and £3,900.
The affordability squeeze, compounded by stagnant income growth and rising living costs, is curtailing house price growth, particularly in southern England. Zoopla’s data shows 64% of homes are in markets currently experiencing annual price declines, a decrease from 82% last October, with most reductions between 0% and -3%.
Despite widespread price declines in southern England, other regions are showing resilience. Scotland and the North East, for example, are either stabilising or seeing no annual price falls, with the north east identified as the UK’s most affordable region with no recorded price declines.
“The rebound in sales being agreed continues for a fourth month as mortgage rates have fallen, consumer confidence improves, and home buyers have much greater choice of homes for sale,” said Richard Donnell (pictured), executive director at Zoopla says. “The pipeline of sales is growing, and we expect 100,000 more people to move home in 2024 than last year.
“There is clear evidence that house prices are firming, and the pace of price falls is slowing. We don't believe that prices will start to rise as buyers face much higher mortgage repayments than in the recent past.
“The market is adjusting to higher borrowing costs and what we need is continued price stability which will create the environment for continued growth in sales and home moves. It’s important sellers remain realistic on what they can achieve for their home.”
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