Agreed house sales are up 13% across all regions compared to a year ago, driven by sub-5% mortgages and pent-up demand, data from Zoopla shows.
The move is “a positive start” to the first few weeks of the year, “reflecting a return of pent-up demand following a weak second half of 2023, when many buyers delayed moving decisions in the face of rising mortgage rates,” says the property site’s January House Price Index.
It adds that available homes for sale are over 20% higher than the same period 12 months ago.
But while demand is up 12% over the same period, led by London and East of England, it is 13% below the five-year average, which includes the pandemic ‘boom years’ from 2021 to 2022.
The report points out that it is “important not to over-interpret the positive start to the year – there is some upside for sales volumes, but we remain in a buyers’ market”.
A fifth of sellers have had to accept more than 10% below the asking price to agree a purchase, and this figure is closer to one in four across southern England.
Mortgage rates fell to 4.2% over the first quarter of last year, which supported sales volumes and led to firmer pricing and modest price falls over 2023, the study says.
It adds: “We expect lower mortgage rates to do the same in 2024 — supporting sales volumes rather than having any impact on prices.”
The survey says “house prices will be kept in check by several factors” this year.
It points out that a greater supply of homes for sale will provide buyers with more choice, especially for larger family homes.
Secondly, it says: “Half of those with a mortgage are yet to refinance onto higher rates. This is important as many would-be buyers are upsizers who will need a larger mortgage to move to a bigger home.
“Higher repayments will ensure buyers remain price sensitive and focused on value for money.”
Finally, it adds: “We are still in a buyers’ market. A small but not insignificant number of sellers continue to cut asking prices to make sure homes attract buyer interest, continuing the trend from 2023.”
The report points out: “The adjustment to higher mortgage rates was always going to take longer than a year, especially given the modest fall in house prices over 2023.
“Lower mortgage rates are welcome news, but it seems unlikely rates will fall much further in the near term, remaining in the 4% to 5% range with the best deals for those with big deposits.
“This will support more sales rather than price rises in 2024 something businesses should welcome as volumes need to recover from the lows of 2023.”
Hargreaves Lansdown head of personal finance Sarah Coles says: “This is a real positive, but sellers shouldn’t get carried away. We also saw a flood of properties onto the market, so buyers can still afford to be choosy.
“It means homes have to be priced realistically and sellers should still be prepared to accept an offer.”
Coles adds: “Looking further ahead, fixed-rate mortgages are expected to get even cheaper, and variable rates should follow suit once the Bank of England starts cutting rates.
“However, mortgages are just part of the picture. An awful lot depends on the financial position households find themselves in too.
“With the UK economy teetering on the brink of recession, the property market may not be out of the woods yet, and this might not be the last of the price falls we see in 2024.”
