The closing months of 2023 have seen a significant upturn in the UK housing market, with a 17% year-on-year increase in new sales agreements, according to Zoopla.
This uptick in activity indicates a positive shift in market sentiment, despite the economic challenges that have pervaded the year.
Zoopla’s latest House Price Index highlights a 19% increase in demand compared to the same period last year, following the impact of heightened mortgage rates on market activities.
The availability of more homes for sale has also contributed to this positive trend, helping to align the expectations of buyers and sellers on pricing.
This shift has led to a slower pace of annual price declines, with the index recording a -1.1% change in November 2023, a marked difference from the 7.2% inflation seen in November 2022.
Cash purchases have become more prevalent, making up a third of all sales in 2023, as sales reliant on mortgages decreased by 30%. This reflects the market’s adaptation to the higher mortgage rates.
In 2024, Zoopla anticipates that buyers, particularly those in the southern regions, will continue to look further afield in their search for value. This trend is expected to be most pronounced among first-time buyers, who are predicted to form the largest group of potential buyers, motivated by the rapid increase in rent.
Despite these trends, house prices are expected to decrease by 2% in 2024, with about 1 million sales projected.
Richard Donnell, executive director at Zoopla, comments on the market’s resilience: “The housing market has been more resilient than many expected over 2023 but it hasn’t been a surprise to us.
“Mortgage regulations introduced in 2015 have stopped an over-valuation of housing which is why the decline in house prices has been modest over the year.
“House price falls have been concentrated in the south and midlands while prices are still slightly higher over the year in Scotland and Northern Ireland.
“UK housing still looks expensive by historic standards which is why we expect UK house prices to fall a further 2% over 2024 as prices and incomes re-align.”
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Nathan Emerson, CEO of Propertymark
“There is little denying the housing market has been turbulent across the past 12 months, mostly driven by high inflation and subsequently higher interest rates as a knock-on effect. Propertymark are optimistic the wider economy has hopefully reached that point of change and it is extremely positive to see sales volumes starting to gain momentum once again compared to this time last year.
“We must remain vigilant over the coming months, however as inflation continues to dip we should start to see this translate into lower interest rates and this will be the point the UK housing market gets fully into gear once again.”
