The latest Zoopla House Price Index reveals that the UK housing market is experiencing a soft repricing, with annual inflation slowing down to 4.1% and property prices 1% lower than in October 2022.
Despite this, market conditions at the end of Q1 2023 are better than anticipated, as buyers and sellers continue to strike deals at an increasing rate.
Zoopla predicts that 500,000 sales completions will occur in H1 2023, putting the market on track for potentially more than one million sales by the end of the year.
Sales activity has been supported by a 65% increase in the number of homes for sale compared to March 2022 and falling mortgage rates.
The index also indicates a shift in sales towards markets offering better value for money, with inner London’s flat market expected to see more activity in 2023. High rental inflation will continue to drive first-time buyer demand.
The Zoopla House Price Index provides valuable insights into the current state of the UK housing market and suggests that despite some soft repricing, the market remains robust and active, offering opportunities for both buyers and sellers.
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Sarah Coles, Head of Personal Finance, Hargreaves Lansdown:
“Zoopla has spotted green shoots in the property market, but at this stage we can’t rule out a lethal frost. There are no guarantees that the spring is set for the kind of flourishing market the estate agents are hoping for.
“There are some real positives, with more sellers coming to the market, which is enabling a reasonably steady stream of sales. Bank of England figures have also shown that mortgage approvals for the coming months have picked up very slightly, and, assuming the current bump in mortgage rates is a temporary blip, the market could benefit from further falls in rates. Meanwhile, the strength in the labour market and rapidly rising rents are keeping a floor under demand.
“However, these delicate green shoots face a tough climate. Demand is still down 43% in a year and sales have fallen 16%, so it’s still a buyer’s market. Zoopla sees more properties on the books as a positive, but it also means buyers can drive a harder bargain, so sellers are likely to get less than they hoped for their home. They’re having to cut prices by an average of 4% – or £14,000 – in order to sell. This is marginally less than the £14,100 a month earlier, but it’s still a significant cut, and it’s one reason why the annual growth of asking prices has fallen for yet another month, to 5.1%.
“We have to take all the positives we can get in the property market at the moment, but asking price inflation continues to fall, and there’s little sign of that reversing any time soon. Nationwide figures show selling prices are now almost 5% below the peak in August last year, and we could realistically expect them to fall further before the correction is finished.”
