"This improvement in activity will support sales volumes which, at one million, reached an eleven-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."
- Richard Donnell - Zoopla
Sales agreed - which is a key measure of market confidence and activity - are up across all regions and countries of the UK in the first three weeks of 2024, Zoopla’s latest House Price Index reveals.
Yorkshire and The Humber leading the way
New sales agreed are up across all regions and countries of the UK averaging a 13% increase in comparison to this time last year. Yorkshire and The Humber (+19%) and the West Midlands (+17%) are leading the improvement in new sales. This is evidence that buyers and sellers are becoming more aligned on pricing. One key trend over 2023 was sellers cutting asking prices to attract buyer interest - this has continued into 2024.
The overall supply of homes for sale is also growing - indicating more confidence among sellers. The overall supply of homes on the market is 22% higher than last year*, while the average estate agent has 28 homes for sale, boosting choice for buyers and a trend that we expect to keep house prices in check.
Higher levels of sales activity in early 2024, following on from the final weeks of 2023, are evidence of greater alignment between buyers and sellers on pricing. There is less need for house prices to fall much further to support sales.
Zoopla’s data shows that annual UK house price falls have moderated again and stand at -0.8% (end December 2023), an improvement from the -1.4% low recorded in October 2023. House price falls are greatest in the East of England (-2.5%), while annual price growth is still positive across Scotland, Northern Ireland and the three northern English regions.
A turn of fortunes in the London housing market?
London (+21%) has led the rebound in new buyer demand in 2024 - the increase in buyer demand across most other regions is in line with or slightly ahead of this time last year.
In London, this increased demand* is evident across the market, with inner and outer London, alongside core commuter areas all registering increased demand for homes. This may be an early sign that the tide is turning for the London sales market after seven years of lacklustre activity compared to the rest of the UK.
London house prices have risen just 13% since 2016 - compared to 34% at the UK level. This underperformance was down to tax changes, the Brexit vote and the global pandemic which hit demand and working patterns.
This was compounded by higher borrowing costs which hit higher value markets harder than lower value areas. The affordability of homes in London - as measured by a simple price-to-earnings ratio - is at its lowest since 2014 - however, London remains expensive compared to the UK average with house prices standing at 13x earnings, down from a high of over 15x in 2016.
Positive start to the year but we remain in a buyer's market
While the start of the year has been positive for the sales market, it’s important not to get carried away by the outlook for the rest of 2024. We remain in a buyer's market with plenty of choice for would-be movers.
Zoopla’s data shows a small but not insignificant number of sellers continue to cut asking prices to ensure homes attract sufficient interest, continuing the trend from the second half of 2023.
Over one in five sellers are still having to accept more than 10% off the asking price to secure a sale. This is close to one in four across London and the South-East and rising across the rest of the UK. It is evidence that while deals are being agreed, home buyers remain price-sensitive and focused on value for money.
Sellers must continue to price realistically if they are serious about moving in 2024. Improved market conditions will boost the chances of a sale, but sellers shouldn't expect to secure interest if they list at a higher asking price and should be willing to negotiate.
Richard Donnell, Executive Director at Zoopla says: “It’s a positive start to the year with all key measures of housing activity higher than a year ago. 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.
“This improvement in activity will support sales volumes which, at one million, reached an eleven-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 Ashwood, Managing Director at London agent Tom Ashwood Real Estate says: “We have most certainly seen a spike in activity across all price ranges from a buyer enquiry perspective in the early part of 2024 and alongside that there are more sellers looking to list their property, with both exceeding our internal expectations for January.
“I feel the increase in buyer activity that has initially been fuelled by a reduction in mortgage rates and a lack of intent to buy through 2023 will assist in keeping asking prices fairly stable through the initial part of 2024, which will lead to more property being listed for sale. If interest rates remain at a stable level and the appetite remains, we may even see an increase in house price inflation this year, particularly through the good selling time we tend to see between the Spring and Summer months.”
Nathan Emerson, CEO of Propertymark comments: “An increase in house sales should give people the confidence to sell their properties again. As the Bank of England chose not to increase interest rates before the end of 2023, consumers should feel positive that borrowing costs are not going to increase for them.
"The next Monetary Policy Committee in February could be an opportunity for the Bank of England to cut interest rates and stimulate growth in the housing market now that inflation is not at the levels we witnessed at the start of last year.”
Tom Bill, head of UK residential research at Knight Frank, said: “The housing market has picked up in January where it left off before Christmas, with buyer demand being driven by falling mortgage rates. Things have improved markedly on paper as the best rates fall below 4% and that should translate into a seasonal spring bounce.
"The economic picture is more settled and we expect 3% UK price growth this year although there is a risk that political volatility increases and begins to cut through with buyers and sellers.”
