House prices across the UK are down just 0.5 per cent in a year as the housing market recovery continues.
New data from Zoopla shows seven regions of the UK seeing price rises and five seeing falls – but asking price reductions remain higher than average.
Buyer demand is up 11 per cent and sales agreed up 15 per cent from a year earlier and on average estate agency branches are agreeing six sales a day – up from 5.2 a year earlier.
The supply of homes is 21 per cent higher than a year ago and Zoopla now expects 1.1 million sales in 2024 – up from 1 million in 2023.
However Sarah Coles – head of personal finance at business consultancy Hargreaves Lansdown – cautions that the market still faces some serious hurdles.
She says: “Falling mortgage rates at the end of 2023 and beginning of 2024 made the key difference in boosting market optimism, and rates are starting to rise again. They’re still only roughly where they were a year ago – and the average two-year rate is still under 5.75 per cent – but a rise may persuade some buyers to press pause.
“We also need to keep an eye on the balance of supply and demand.
“We have more buyers around, but demand is far from fully recovered, there are more homes on the market now. With properties for sale up a fifth, the balance of power is likely to remain with buyers, who are still securing higher than average price reductions.
“The picture varies a great deal across the country. In the south, excluding London, we’re seeing the impact of relentless eye-watering price rises over the past few years.
“As a result, affordability is a major problem, and we’re still seeing asking prices drop significantly. London is an exception, because prices didn’t rise as far or as fast as elsewhere in the south, so incomes have caught up a bit. It’s one of the strongest areas for sales right now. The rest of the country has seen prices rise over the past few years, just not quite so steeply or as high, so falls have been more limited.”
Looking further ahead, Coles says the strength of the economy will be key, adding that meagre business investment and low consumer confidence are likely to bring headwinds for economy and the property market.
She concludes: “This doesn’t mean buyers need to pack up and head home. If you can afford the property you want for the long term, and secure a manageable mortgage, you can ride out the short-term ups and downs of the market.
“It does mean it makes sense to drive a hard bargain, and it’ll be important not to spend your way through your emergency savings safety net, because if there are tough times ahead, it will make all the difference to have something to fall back on.”