House prices are on track for a 2% increase in 2024, with supply rising by over 16%, Zoopla’s latest House Price Index has found.
The index revealed that the housing market is continuing to adjust to 4%+ mortgages with positive signs of increased activity.
While house prices increased by just 0.1% in the past 12 months, to £265,600 on average, house prices increased across all regions oover the first half of 2024.
Zoopla said that it expects house prices to increase slowly but steadily over the second half of 2024, on average increasing towards around 2% by the end of the year.
The improved outlook for the housing market was bolstered by an increased number of homes for sale – higher than at any point in the previous six years.
This increased level of choice for buyers supported more sales going through.
Zoopla said that many would-be movers were upsizers – those looking for a larger home, usually to accommodate a growing family.
Greater supply resulted in the number of sales agreed being 16% higher than a year ago.
Sales agreed were 22% above pre-pandemic levels.
Buyers paid a greater proportion of the asking price this year compared with last year, when higher mortgage rates impacted demand.
Latest findings showed that buyers typically paid 96.8% of the asking price – the highest figure for 18 months.
The figure was on a par with the longer-term average and pointed to continued house price growth.
In pound terms, this equated to houses selling for an average of £16,600 below their asking price in June 2024.
While growth over the last 12 months has been largely static (increasing by just 0.1%) the regional view showed more of a mixed picture.
For example, while Belfast saw a 4.3% increase, and Northern Ireland more widely a 3.9% increase, Scotland has seen an overall increase of 1.4%.
The South East England saw a fall of -1%, South West England a drop of -0.7% and in the East of England, prices were down -1.2%.
Richard Donnell, executive director at Zoopla, said: “The housing market is starting to hot up after a stone cold 2023.
“There are clear signs of growing confidence amongst buyers and sellers with many more homes for sale and buyers paying an increased proportion of the asking price.
“We expect to see more sales but house price inflation will be kept in check by more supply and affordability pressures keeping a lid on buying power, especially across southern England.”
He added: “While we don’t expect to see any impact from the new Government, or the King’s Speech specifically, in the next 12 to 18 months, it is possible we will in the longer term.
“The housing market is essentially an extension of the UK economy.
“Government policies focused on economic growth that feeds into income growth will help support both home buyers and renters.
“The Bank of England will have more impact on the market in the short term and much depends on the timing of the first base rate cut.”
Simon Gerrard, managing director of Martyn Gerrard estate agents and past president of the National Association of Estate Agents (NAEA Propertymark), said: “It is little surprise that house price growth has levelled off in the year to June, but after an extended period of severe turbulence under the previous government, this is arguably no bad thing for the market.
“I think today’s house price growth figures probably reflect the transitional period that we’re in post-election, and that this is a brief stall, rather than a grinding halt, for the property market.
“There are several indicators promising a return to house price growth soon.
“Inflation has held steady at the Bank of England’s target of 2%, so there is a strong chance that the base interest rate will come down in August or September, which will fire the gun on property searches that have been on hold.”
He continued: “From a wider perspective, it has also been of great relief to see the government prioritise building new homes.
“Supply is possibly the greatest challenge that the new government faces, and we will have to wait and see whether it can fulfil its promise to resolve this.
“Nonetheless, I am hopeful that this will be the case, and that the change in Government ushers in a new era of sustainable, steady house price growth that is underpinned by a healthy flow of new homes being built.”
Reaction:
Malcolm Webb, risk director, Legal & General Surveying Services:
“It’s likely the rise in house prices reflects growing demand as a result of fresh cuts from lenders and increased confidence in the market.
“However, it is also a reminder that buying a house is one of the biggest financial purchases many people will undertake in their lifetime, and should not be a decision that is taken lightly, or without seeking the correct professional advice.
“Perhaps one of the more overlooked aspects of the homebuying process is commissioning a home survey, with only one in ten choosing to do so.
“With average house prices now sitting at £265,600 on average, it’s more important than ever to get a survey to ensure they have as much information as possible about the true condition and value of the property they are buying.”
