New Year Bounce - strong start to 2024 housing market says Zoopla

A return of pent-up demand and mortgage rates falling below five per cent have boosted the start of the year for the housing sales market in 2024.

That’s the verdict of Zoopla’s latest House Price Index. 

New sales agreed are up across all regions and countries of the UK averaging a 13 per cent increase in comparison to this time last year. 

Yorkshire and The Humber (up 19 per cent) and the West Midlands (up 17 per cent) 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 per cent 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 House Price Index shows that annual UK house price falls have moderated again and stand at down 0.8 per cent an improvement from the 1.4 per cent low recorded in October 2023. 

House price falls are greatest in the East of England (down 2.5 per cent) while annual price growth is still positive across Scotland, Northern Ireland and the three northern English regions. 

London (up 21 per cent) has led the rebound in new buyer demand in 2024 - the increase in buyer demand across most other regions is in line 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. Zoopla says 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 per cent since 2016 - compared to 34 per cent at a UK level. 

The portal says 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.  

Yet despite all this positivity Zoopla cautions that it’s important not to get carried away by the outlook for the rest of 2024. 

It says: “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 per cent 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.”