UK Housing Market Improves During First Quarter of 2024
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House Prices & Sales Activity Both on the Rise in the UK
According to the latest analysis from Zoopla, the UK housing market has improved across every significant measure during the first three months of 2024. The data shows house price growth and sales activity are rising, while supply is also looking more positive.
Let’s look at the data in more detail.
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What Is Sales Activity Like in the UK in Q1 2024?
Sales agreements have increased by 9% compared to last year. We’ve also seen a 7% rise in home sales agreements in Q1 2024 compared to Q1 2023. This increase is prompting more sellers to list their homes for sale, with a 20% rise compared to last year.
The macroeconomic environment is supporting this trend. Mortgage rates have fallen to 4.4% for a 75% loan-to-value 5-year fixed-rate loan, down by over 1% from a high of 5.8% in June 2023. According to Zoopla, UK consumers’ confidence in their finances is at its highest level in over two years.
The areas experiencing the most substantial growth in sales activity are those with more affordable house prices, such as Yorkshire and The Humber (+11%), where the average property price is £185,600, and the North West (+13%), with an average property price of £194,500.
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Are Asking Prices Being Achieved in the UK Housing Market in 2024?
Market conditions are improving, as shown by the narrowing gap between asking and agreed purchase prices, which now match pre-pandemic levels.
From November, the average discount from the asking price to agreed purchase price decreased from 4.5% to 3.9% by March 2024, marking the lowest level since July 2023. This means a £10,000 discount compared to November. The figures show sellers are becoming more realistic with their asking prices, and buyers are gaining confidence.
Although this trend is observed nationwide, discounts remain larger in London and the South East, where the average discount to asking price is 4.3% or £19,500.
However, prices are still considerably higher than the national average in these regions. If you’re a buy-to-let property investor looking for good-value properties to add to your property investment portfolio, consider looking further north from the capital at places like Liverpool and Manchester. Why not learn morea about the latest passive income ideas in the UK with our dedicated passive income guidebook.
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What Can You Expect in the Near Future?
Zoopla indicates that increasing the availability of homes for sale will help prevent significant price fluctuations. In Q1 2024, the average estate agent had nearly 30 homes for sale, returning to levels seen before the pandemic. This gives buyers more options and bargaining power, especially for properties needing help attracting interest from buyers quickly.
The main driver of improved housing affordability in 2024 is expected to be rising household disposable incomes. Disposable incomes are forecasted to increase by 3.5% throughout 2024, while house prices are anticipated to remain relatively stable.
Additionally, the timing and extent of interest rate cuts are crucial factors that could enhance market confidence and lower mortgage rates. Anticipations of reduced interest rates are already factored into fixed-rate mortgages today. Further decreases in interest rates would likely lead to slight reductions in mortgage rates, although the extent of these reductions depends on how much base rates are expected to drop in money markets.
Executive Director at Zoopla, Richard Donnell, says: “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 a 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.”
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UK Housing Market Improves During First Quarter of 2024
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