The housing market is seeing a renewed increase in sales, according to Zoopla’s latest house price index, as buyers return to the market following the end of stamp duty reliefs and the Easter lull. The number of sales agreed in May is running at its fastest rate in four years since the pandemic boom of 2021.
This is due to an increased number of homes for sale, with 13% more homes on the market than a year ago, as well as improvements in the cost and availability of mortgages.
The house price index shows average UK house prices are 1.6% higher than a year ago at £268,250, an increase of £4,330 over 12 months. To ensure continued buyer interest, Zoopla says sellers must maintain a realistic approach to pricing their homes, especially with 13% more homes for sale than last year.
Separate data shows the average home sale is currently being agreed at 3% or £16,000 below the average asking price, a level that has been stable over recent months.
Sales agreed 6% higher than last year
Changes in mortgage rates over the last three years have significantly impacted the annual growth rate for housing sales and mortgage applications. Sales declined sharply in 2022/23 as mortgage rates hit 6%. The growth in sales rebounded in 2024 as mortgage rates fell, boosting demand for mortgages.
Growth in sales and mortgage approvals have slowed to more sustainable levels in recent months, impacted by the ending of stamp duty reliefs in April and the Easter holidays. However, sales agreed have started to increase once again and are 6% higher than in May last year. Lenders are adjusting how they assess the ability of buyers to afford higher mortgage rates, with home buyers now able to borrow up to 20% more. This has supported consumer confidence and, in turn, an increase in the number of sales agreed.
North West hottest housing market for price rises in England
House price growth varies widely at a city level, from small price falls in Aberdeen at -1.4%, Brighton at -0.4% and Bournemouth at -0.4%, to prices increasing by over 5% in Blackburn at 5.8% and Belfast at 6.1%. The fastest-growing markets tend to be outside Southern England.
The strongest price gains are being registered in cities across the North West as employment growth boosts demand and house prices. Higher home values and rents in large cities like Manchester and Liverpool, where prices have increased by 2.5% and 3% respectively, are pushing demand into adjacent and accessible areas, boosting house prices. In addition to Blackburn, home values are rising fast in other North West cities, including Wigan (4.4%) and Birkenhead (4.1%).
Aberdeen is under-performing within the Scottish market, with prices down by 1.4%, due to low investment in the oil and gas industry, resulting in weaker economic conditions. This price growth is likely to continue over the rest of the year as home values rise in more affordable areas.
More homes for sale across Southern England
The increased number of homes for sale in southern England is significantly boosting buyer choice and, in turn, keeping price growth in check. Areas with faster growth in sales see the number of homes for sale being eroded more quickly, limiting what is available and supporting faster house price growth.
There are 21% more homes for sale in the South West compared to this time last year, with 17% more in London and 15% more in the South East, resulting in slower growth. This, along with affordability constraints, explains why house price growth is less than 1% across all regions of southern England, from 0.5% in the South East to 0.9% in the South West.
In contrast, there are just 3% more homes for sale in the North West and 5% more in Scotland than a year ago. Lower availability of homes for sale, better affordability and faster growth in sales explain why house prices are 3% higher across the North West and 2.9% higher in Scotland, with above-average price rises recorded across northern England and Northern Ireland.
Richard Donnell, executive director at Zoopla, commented: "More homes for sale means more buyers looking to move home. This, coupled with more attractive mortgage deals and changes to how lenders assess affordability, is supporting an increase in the number of sales being agreed.
“There are more sales and stronger house price increases in northern regions of England and Scotland, where homes are more affordable. In southern regions of England, affordability continues to weigh on price inflation and the number of sales being agreed.
“Sellers and buyers need to adopt different tactics based on where they live across the UK; however, all sellers need to keep their feet on the ground and be realistic on pricing expectations.
“We expect sales to keep rising over the second half of the year, with UK home values on track to be 2% higher by the end of the year.”
