New data reveals the housing market is slowly recovering, with buyer demand rising and supply of homes at a seven-year high.
According to Zoopla’s latest house price index, the housing market is steadily recovering from the impact of higher mortgage rates, with house prices slowly on the rise. UK house prices have risen 1.4% over the first seven months of 2024, compared to just 0.1% over the first seven months of 2023. Supply of homes for sale is now at a seven-year high, with an average agent having 33 homes to sell, and buyer demand is up 20% on last year.
The improvement in house prices over the year to date is being felt across most of the UK, with annual house price inflation ranging from -0.9 % in the East of England to +5.1 % in Northern Ireland.
‘Momentum in the sales market continues to build, as mortgage rates drift lower and more and more sellers gain the confidence to list their home for sale,’ says Richard Donnell, Executive Director at Zoopla. ‘Buyers have much greater choice, which will support sales numbers, but this will keep price rises in check.’
Price your property realistically
While measures of market activity are higher and price inflation positive, Zoopla warns it’s important sellers remain realistic on pricing.
Buyers have had their purchasing power eroded by higher mortgage rates over recent years and, while this is slowly being offset by faster income growth, there’s still a way to go to repair affordability. This accounts for the fact that one in five homes had to have the asking price reduced by 5% or more during August to attract greater buyer interest, with these homes taking more than twice as long to sell than homes without a price reduction.
Zoopla estimates it takes around a month (28 days) to agree on a sale where there has been no asking price reduction, but more than two months (73 days) when the asking price has been cut to attract demand. Also, a higher proportion of homes with asking price cuts don’t sell at all.
Less purchasing power
‘Buyers have less purchasing power than two to three years ago and remain price sensitive, meaning sellers can’t afford to get ahead of themselves on where to set the right price for their home,’ adds Donnell. ‘If you need to cut the asking price by 5% or more, then your home will take twice as long to sell or may not sell at all.’
As more sellers come to the market, and with more expected as we enter the post-holiday autumn market, the key message is that getting the asking price right at the outset is essential, to allow serious sellers to secure a timely sale.