Forecasts show house prices are set to rise across the UK later this year, as more people sell their homes, boosting the market. Zoopla predicts house prices could rise by 2% by the end of 2024.
The real estate portal said the improved outlook for the housing market was due to an increase in the number of homes for sale: The number of transactions agreed in the four weeks to July 21 was up 16% compared to the same period last year, and the average number of homes for sale per real estate agent was higher than at any point in the past six years.
According to Zoopla’s House Price Index, UK buyers are currently paying 96.8% of the asking price – the highest amount in the last 18 months. This equates to properties selling for an average of £16,600 less than the asking price in June 2024.
Bank of England figures released on Monday showed net mortgage approvals, an indication of future borrowing levels, were little changed in June from the previous month, suggesting a sluggish property market ahead of the general election and Thursday’s interest rate decision.
Richard Donnell, executive director at Zoopla, said: “The housing market is starting to pick up after a cooling 2023. There are clear signs of growing buyer and seller confidence, with more homes on the market and buyers paying an increasing proportion of the asking price.”
He added that while Zoopla expects sales to rise, house price growth will be “restrained by rising supply and price pressures, which will hold down purchasing power, particularly in the south of England”.
Donnell said the King’s Speech and the new government’s plans were unlikely to have a material impact on the market outlook over the next 12 to 18 months, but he said they could have an impact “over the longer term”.
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“The Bank of England will likely have a bigger impact on markets in the short term, but that will depend largely on the timing of the first base rate cut,” he said.
Experts are divided on whether a rate cut will take place on August 1, but the bank is widely expected to start cutting its base rate of 5.25% by the end of 2024.
Simon Gerrard, former chairman of the National Association of Estate Agents, said: “With inflation stabilising at the Bank of England’s target of 2%, a cut in the base rate is likely in August or September which will spark some put-off property hunting.”
The housing market is still adjusting to higher mortgage costs as interest rates start to rise in 2022. House prices have risen just 0.1% over the past 12 months (to an average of £265,600), but have risen in all UK regions in the first half of 2024.
Zoopla said more sellers naturally mean more buyers looking to buy for a variety of reasons. The company noted that many of those looking to move are looking for bigger homes to accommodate growing families. The data showed that more buyers are having to look further afield to get the home and amenities they want.
