Property sales and demand across the UK were higher at the start 2024, driven by a return of pent-up demand and mortgage rates dropping below 5%.
Property website Zoopla said new sales agreed were 13% higher in the first three weeks of January than this time last year, when higher mortgage rates hit market activity.
Demand was up 12%, measured by would-be buyers contacting agents to inquire about and arrange viewings for a specific property listed on Zoopla.
Zoopla recorded an annual house price fall of 0.8% across the country in December, with a steeper drop of 2.5% in the East of England.
In December, the average UK house price stood at £264,400.
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In London, prices were down 1.1%, with the average house in the capital going for £536,800. The city also saw a rebound in new buyer demand (21%), with housing affordability in the capital being the best since 2016.
London house prices have risen 13% since 2016 — compared to 34% at a UK level.
The biggest house price increases were recorded in Belfast, up 4% to £170,200. This was followed by Glasgow, up 1.5% to £146,300 and Edinburgh, up 1.3% to £269,900.
“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,” Richard Donnell, executive director at Zoopla, said.
“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,” he added.
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The data also revealed that over one in five sellers are still having to accept more than 10% off the asking price to secure a sale, a trend started in 2023. This is close to one in four across London and the South-East and rising across the rest of the UK.
“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, Tom Ashwood, managing director at London agent Tom Ashwood Real Estate, said.
The Bank of England has raised interest rates to a 15-year high of 5.25% before hitting the pause button for the past few months. Markets believe Threadneedle Street will begin bringing rates down as early as May and 2024 could finish with interest rates at 4%.
The average rate on a two-year fixed deal last week stood at 5.69% while for a five-year deal, rates came down to 5.26%, according to figures from Uswitch. In July 2023 rates peaked at 6.86%, during the turmoil that marked Liz Truss’ premiership.
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