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The number of agreed property sales so far this month is 13 per cent higher than a year ago as falling mortgage costs encourage buyers and sellers back to the market, according to a new analysis.
The Zoopla house price index, released this morning, found a significantly more buoyant picture for the UK property market in the first three weeks of January compared with a year earlier.
While sales volumes increased everywhere during this period, the biggest rise was found in Yorkshire and the Humber, which was up 19 per cent year-on-year, followed by the West Midlands, at 17 per cent, the South West at 14 per cent, then Scotland and London (both 13 per cent) and Wales (12 per cent). The smallest rises were in the North East and North West (both 3 per cent).
As well as a rise in sales, the property website reported that the supply of homes for sale on the market was 22 per cent higher than a year ago, as sellers who withdrew properties — or failed to list them — during the mortgage-induced slowdown of 2023 decided to put them back on.
The surge in buyer interest has been greatest in London, according to Zoopla. It said it had registered a 21 per cent increase in new buyer demand in the capital in the first three weeks of January compared with last year, the biggest increase of any UK region, and well above the national average of 12 per cent. However, it cautioned that the price of properties in London would hold the market back, with house prices still 13 times average earnings, albeit down from an all-time high of 15 times in 2016.
There is growing optimism among prospective buyers and sellers as mortgage interest rates, which skyrocketed in 2023, begin to fall consistently. Inflation was at 4 per cent in the year to December — down from a high of 11.1 per cent in October 2022 and well below the Bank of England’s expectation of 4.6 per cent — while average mortgage rates have tumbled to their lowest levels since early June, with some lenders cutting rates to beneath 4 per cent.
Richard Donnell, executive director at Zoopla, warned that, despite the increase in property market activity, prices would remain flat and the market would remain a “buyer’s market” because of affordability constraints and relatively high rates.
“The fall in mortgage rates has led to a rebound in buyer demand and sales following a weaker second half of 2023 when many movers put decisions on hold,” he said.
“This improvement in activity will support sales volumes which, at one million, reached an 11-year low in 2023. We don’t see these trends as a precursor to higher prices in 2024 as it remains a buyer’s market. Sellers looking to move should be encouraged by these early signals of activity, but buyers remain price sensitive and focused on value for money. Over-optimism by sellers could quickly stall the current improvement in market activity.”
Tom Bill, head of UK residential research at Knight Frank, which predicts UK prices will rise by 3 per cent in 2024, warned that political uncertainty during a general election year could still slow the market by making buyers and sellers more cautious.
