House prices fell slightly in the year to December, but the property market is now heating up due to drop in mortgage rates according to Zoopla.
The property portal said prices fell 0.8 per cent in the 12 months to the end of December, but more buyers and sellers were entering the fray and an increasing number of homes were being offered.
In the previous month, house prices fell by 1.2 percent compared to the previous year.
Zoopla also revealed that the number of completed sales was 13% higher than last year and higher in all countries and regions.
Rebound: There were more buyers, an increase in the number of homes for sale and a slight increase in sales during the first weeks of January, according to Zoopla
Buyer demand is 12 percent higher than a year ago, although it remains 13 percent below the five-year average.
More homes are also coming onto the market, according to the real estate website. The number of available homes is up 22 percent compared to the same period last year.
The average real estate agent has 28 homes for sale, double the low point recorded at the end of 2022, when there were only 14 homes per real estate agent.
It’s still a buyer’s market
Despite a positive start to the year, the market remains favorable to buyers, according to Zoopla.
It says a fifth of sellers still accept a price more than 10 percent lower than the asking price to secure a sale. This represents almost one in four in London and the South East.
Richard Donnell, executive director of Zoopla, said the key trend for 2023 was sellers reducing asking prices to attract buyer interest. He said this continued until 2024.
“It’s a positive start to the year with all key measures of real estate activity higher than a year ago,” Donnell said.
“Lower mortgage rates led to a rebound in buyer demand and sales following a weaker second half of 2023, during which many movers put decisions on hold.
Buyers’ market: a fifth of sellers must accept a price more than 10% below the asking price to secure a sale, that’s more than one in four sellers in the south of England.
Buyers on the hunt again: Buyer demand is 12 percent higher than a year ago, but still 13 percent below the five-year average, which includes the pandemic “boom years” (2021-2022)
He adds: “This improvement in activity will support sales volumes which, at one million, reached an eleven-year low in 2023.”
“We do not view these trends as a harbinger of higher prices in 2024, as the market remains favorable for buyers.
“Sellers looking to relocate should be encouraged by these early signals of activity, but buyers remain price sensitive and focused on value for money.
“Excessive optimism on the part of sellers could quickly stall the current improvement in market activity.”
Will prices fall in 2024?
Zoopla revealed that the fall in house prices was greatest in the East of England, where prices fell by 2.5% in 2023.
Meanwhile, house prices have risen in Scotland, Northern Ireland and the north of England.
House price falls were greatest in the east of England, where prices fell by 2.5% in 2023. At the same time, prices rose in Scotland, Northern Ireland and the north of England.
Looking ahead, this suggests that higher levels of sales activity in early 2024, continuing from the final weeks of 2023, reflect greater alignment between buyers and sellers on pricing.
For this reason, Zoopla analysts say that property prices will not fall much further.
Earlier this month, the real estate company Knight Frank predicted that hhouse prices will increase by 3 percent this year he had predicted three months earlier a 4 percent decline by the end of 2024.
Anthony Codling, European head of housing and building materials at investment bank RBC Capital Markets, said: “With rising wages, falling inflation, falling mortgage rates and increasing discussions about election-related housing stimulus plans, we expect house prices to rise in 2024.”
Tom Ashwood, managing director of London estate agent Tom Ashwood Real Estate, says: “I think the increase in buyer activity, initially fueled by a reduction in mortgage rates and a lack of intention to buy up ‘in 2023, will help keep asking prices fairly stable. until early 2024, which will result in more properties coming up for sale.
“If interest rates remain at a stable level and appetite persists, we could even see an increase in house price inflation this year, especially thanks to the good sales period we We tend to observe between spring and summer.”
Does the London market seem more affordable?
London led the rebound in demand from new buyers, up 21 per cent compared to the same period last year.
This may be because housing affordability in London is the best it has been since 2014, according to Zoopla, mainly thanks to stagnant prices and rising wages.
London house prices have only increased by 13% since 2016, according to Zoopla, compared to 34% at the UK level.
Housing affordability in London – as measured by a simple price-to-earnings ratio – is at its lowest level since 2014.
However, London remains expensive compared to the UK average, with house prices running at 13 times earnings, down from a peak of more than 15 times earnings in 2016.
London’s slowly improving housing affordability is good news, but home buyers still face a significant affordability challenge, with mortgage rates having doubled since 2021.
Richard Donnell of Zoopla adds: “In London, this increased demand is evident across the market, with inner city and outer London, as well as key suburban areas, all seeing increased demand for housing.
“This could be an early sign that the tide is turning for the London sales market after seven years of lackluster activity compared to the rest of the UK.”
Matt Thompson, head of sales at London estate agent Chestertons, adds: “2024 has started with a busy property market, with buyers motivated to begin or complete their property search.
“The increasing availability of more affordable mortgage deals is therefore playing a key role and will likely continue to fuel an increase in buyer activity over the coming weeks.”
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