Pent Up Demand Gives Early 2024 Boost to UK Housing Market

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Falling Mortgage Rates and Renewed Demand Causes New Year Market Bounce

According to Zoopla’s latest market report, the uplift of sales seen in the back half of 2023 has continued in 2024.

The UK housing market has experienced a sizable boost in demand during the first three weeks of the year, culminating in an uptick of 13% in agreed sales compared to January 2023 and a 22% increase in the number of homes listed for sale.

Let’s dissect this report in more detail and see its effect on buy-to-let investment going forward.

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UK House Prices See Slowdown in Decline

As we enter February, the modest falls in house prices seen last year are slowing as agreed sales increase in early 2024.

The average house price in the UK had an annual difference of -0.8% in December 2023, compared to a -1.4% dip in October 2023.

Price falls have mainly affected the East of England (-2.5%) and the South West (-2.2%). In terms of house price increases, aside from Northern Ireland (3.20%) and Scotland (1.80%), Yorkshire and Humber and the North West were the top two regions, with rises of 0.50% and 0.30% respectively.

Here’s a full breakdown of UK house price changes by region:

Region	Annual % House Price Change
Northern Ireland	3.20%
Scotland	1.80%
Yorkshire & Humber	0.50%
North West	0.30%
North East	0.00%
Wales	-0.20%
West Midlands	-0.40%
London	-1.10%
East Midlands	-1.30%
South East	-1.90%
South West	-2.20%
East of England	-2.50%

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Why Has There Been an Uplift in Buyer Activity?

Climbing mortgage rates have put buyers off since mid-2023, leading to a sharp fall in demand. Thanks to some lenders offering mortgage rates below 5%, there’s been a sharp uptick in buyer activity.

This seasonal boost demonstrates the pent-up demand from buyers reluctant to move house during late 2023 due to these rising mortgage rates.

According to Zoopla, the uplift in sales also implies that ‘buyers and sellers are becoming more aligned on pricing after a year of tussling.’ There’s been a 22% rise in homes on the market, showing sellers are more confident when listing their property for sale, which has led to more choices for buyers. If you Invest in real estate you will be familiar with this uplift in activity within the property market.

Buyer demand is now 12% higher than a year ago but is still 13% below the 5-year average. This shows that the market can recover and improve further as conditions look more promising compared to the past few years.

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Which Regions are Most Active?

New sales have increased across all UK regions, but London and the East of England have seen the biggest comeback regarding buyer demand.

However, that’s not to say that these areas had the highest sales. According to Zoopla’s House Price Index, although other regions had more considerable increases in Sales (+19% in Yorkshire and the Humber, for example), these increases were typically in line with last year’s growth. They believe London’s buyer demand rebound could ‘reflect a turn of fortunes for the London housing market.’

This increased demand has been observed across all London areas, including inner London, up-and-coming areas of London, and commuter towns.

London has trailed behind other regions over the past 7 years when it comes to price growth and sales. For example, the price of a flat in the capital has increased by only 2% in this time frame. Currently, London is the most affordable it has been since 2014. But it’s still much pricier than the UK average, meaning investment properties in London may remain less prevalent compared to other regions.

Zoopla forecasts that London’s market conditions will continue to increase this year, thanks to rising earnings and slower house price growth boosting sales numbers.

What Does This Mean for the Rest of 2024?

While mortgage rates haven’t fallen dramatically, the current rates have led to renewed market activity, which is a good sign. There has also been a slowdown in price drops, but Zoopla predicts that mortgage rates will not hugely impact property prices.

According to Savills’ residential forecast, 2024 will be another slow year for capital value growth. However, the outlook is more optimistic for 2025 onwards, with 2026 predicted to show a return to healthy growth for the UK on average.

If you want to learn more about regional property markets, take a look at our latest buy-to-let area guides covering topics such as buy-to-let property in Oxford and investment property available in Watford.

Pent Up Demand Gives Early 2024 Boost to UK Housing Market