- Zoopla revises forecast, now expects 2.5% rise in 2024
- Falling mortgage rates boost buyer activity and sales
- Sellers advised to price realistically; oversupply affects market
According to Zoopla, house prices are on track to conclude the year 2.5 percent higher than when it began, although sellers are still advised not to set unrealistic asking prices.
It represents a more optimistic forecast from the property marketplace, which expected a 2% price drop.
The property website stated that house prices increased by 1.4% in the first seven months of 2024, compared to 0.1% the previous year.
Mortgage rates are falling, which is helping to re-energize the housing market.
With some buyers now able to acquire a five-year fixed rate mortgage for less than 4%, Zoopla reports that 20% more buyers are looking than last year when the lowest five-year fixed mortgage rates were above 5.25 percent.
According to Zoopla, this has increased sales, as expected. The number of sales agreed is up 23% over the previous year.
However, while activity has improved, a glut of homes on the market, along with mortgage rates that are still higher than many people are used to, is helping to keep prices under control.
Sellers are urged to be cautious when setting asking prices, as one in every five had to lower their asking price by 5% or more in August.
According to Zoopla, the number of homes for sale has reached a seven-year high, with the typical estate agency listing 33 residences.
This suggests that it is still a buyer’s market.
One in every five sellers is lowering the asking price by 5% or more, and properties are taking twice as long to sell if priced too high.
Zoopla’s experts predict that increased buyer options will keep house price inflation under control during 2024 and 2025.
According to Richard Donnell, executive director of Zoopla, momentum in the sales market is increasing as mortgage rates fall and more sellers acquire confidence in listing their houses for sale.
‘Buyers have considerably more choice, which will boost sales, but it will keep price increases in control.’
Mortgage rates cause purchasers to seek a bargain.
While property prices rise, buyers remain price-sensitive as mortgage rates remain high.
This is gradually being countered by quicker wage growth, but Zoopla believes there is still a long way to go until affordability is completely restored.
This explains why, in August, one out of every five homes had its asking price slashed by 5% or more to attract more buyers.
Homes requiring an asking price drop take more than twice as long to sell as homes without one.
According to Rightmove’s separate examination of sales over the previous five years, discounted properties are twice as likely to see deals fall through and are more likely not to be sold at all.
Like Zoopla, Rightmove reports that many sellers continue asking for considerably more than their home is worth.
Richard Donnell of Zoopla adds: “We find it takes around 28 days to agree a sale where there has been no asking price reduction, but sales take 73 days on average when the asking price has been reduced by 5% or more to attract demand.”
‘Getting the asking price right from the beginning is critical for severe sellers to guarantee a speedy transaction.
‘If you have to reduce the asking price by 5% or more, your house will take twice as long or may not sell at all.
The North-South house price disparity persists.
According to Zoopla, the boost in property prices over the past year has been felt across the country.
However, a North-South split remains, with prices in the North growing.
“Take a step towards financial freedom – claim your free Webull shares now!”
In the year ending in July, housing prices rose in eight regions while falling in four.
Average house prices have fallen by 0.9% year on year in the East of England, 0.7% in the South East, and 0.6% in the South West.
Prices in London and the East Midlands have remained unchanged from a year ago.
House prices are rising faster than the national average in lower-value and more affordable property markets, frequently located near larger cities in England.
Prices in Wolverhampton are up 3% year on year, while in Oldham and Wakefield, they are up 2.8% and 2.7%, respectively.
House prices are soaring significantly faster in Scotland. In Dumfries and Galloway, they are up 4.4% year on year, while Galashiels and Falkirk are up 3.1% each.
What’s next for property prices?
Zoopla is not alone in forecasting that house prices will end the year higher than they began.
Knight Frank predicts that house prices will finish in positive territory.
Tom Bill, head of UK residential research, stated: “The simple equation for the property market this autumn is that buyer demand will increase as mortgage rates continue to fall.
As underlying inflation falls, more sub-4 percent mortgages emerge, and another rate cut is predicted before Christmas, we believe UK house prices will rise by 3% this year.
‘Financial pain will continue to enter the system as purchasers and sellers exit advantageous rates, and there is uncertainty around October’s Budget, so the opportunity for price exuberance is limited.’
