Housing market activity improving across all key measures: Zoopla

Sales agreed are up 9% compared to a year ago.

Related topics:  Finance News,  Housing market
Rozi Jones | Editor, Barcadia Media Limited
28th March 2024
house price sign sale
"House prices are falling at a slower rate but it remains a buyers market where there is much greater choice of homes for sale."
- Richard Donnell, executive director at Zoopla

Housing market activity has improved across key measures in the first quarter of 2024 including sales activity, house price growth and the supply of homes for sale, which is a fifth higher than last year, according to the latest data from Zoopla.

New sales agreed are now 9% higher than a year ago, with 7% more home sales agreed over Q1 2024 vs Q1 2023. This trend is encouraging more sellers to list their homes for sale with 20% more homes for sale compared to this time last year.

This is also being supported by the macroeconomic environment, with mortgage rates now at 4.4% for a five-year fix at 75% LTV, down by over 1% from a high of 5.8% in June 2023.

The strongest growth in sales activity continues to be in areas with more affordable house prices such as Yorkshire and The Humber (+11%) where the average house price is £185,600 and the North West (+13%) with an average house price of £194,500. The strongest growth in new sellers listing homes is in the South West (+28%) and North East (+26%).

Further evidence of improving market conditions is the narrowing in the discount between the asking price and the agreed purchase price - which is now in line with the pre-pandemic average.

The average discount from asking price to agreed purchase price has narrowed from 4.5% last November to 3.9% in March 2024 - the lowest level since July 2023. This equates to a £10,000 discount compared to a £14,250 discount in November and reflects a combination of greater realism from sellers on their asking price and growing buyer confidence, Zoopla says.

This is a national trend but discounts remain larger in London and the South East, where there is an average discount to asking price of 4.3% or £19,500.

What’s next for interest rates and the housing market?

Zoopla believes greater availability of homes for sale will keep price rises in check. The average estate agent had almost 30 homes for sale in Q1 2024, a return to the pre-pandemic average. This means buyers have more choice and room to negotiate, especially where homes are failing to attract buyer interest in a timely manner.

Rising household disposable incomes are expected to be the primary driver of improved housing affordability in 2024. Disposable incomes are projected to increase by 3.5% over 2024, while house prices look set to remain broadly flat over the year.

The timing and scale of interest rate reductions over H2 are other key factors that could boost market sentiment and reduce mortgage rates. Expectations of lower interest rates are already priced into fixed rate mortgages today. Zoopla says lower interest rates would likely result in further modest declines in mortgage rates but how far depends on how low money markets see base rates falling.

It added that mortgage rates around the 4% range would support sales volumes - but would require incomes to continue to rise faster than house prices to help reset housing affordability, especially in southern England.

Richard Donnell, executive director at Zoopla, said: “Rising wages and falling mortgage rates have boosted consumer confidence and this is feeding into improving levels of housing market activity over the first quarter of 2024. House prices are falling at a slower rate but it remains a buyers market where there is much greater choice of homes for sale.

"We don't believe that house prices are about to increase more quickly but there is more buyer interest. Sellers need to remain realistic on where they set the asking price if they are to take advantage of improving market conditions to secure a sale and move home in 2024.”

More like this
to our newsletter

Join a community of over 30,000 intermediaries and keep up-to-date with industry news and upcoming events via our newsletter.