House prices in the UK are on track to rise by 2% this year, data from a property listing site showed.
The Zoopla house price index stated values would “increase slowly but steadily” over the second half of the year. The firm said the improved outlook was due to a rise in the number of homes for sale.
According to Zoopla, the number of homes available on the market is at its highest point in six years and agents now have an average of 33 homes on their books. It said the greater level of choice for buyers was helping sales go through, as buyers tend to be motivated by more sellers in the market.
Chris Little, chief revenue officer of Finova, said: “After a fairly flat May, it should be no surprise that the general election has supercharged market activity. As prices increase and more homes go on for sale, the market temperature is rising upwards.
“The warm sentiment might have been stoked by the government’s plans to tackle the market’s long-standing affordability problem with the single biggest housebuilding regime in a century.”
House prices up marginally in June
Zoopla found that house prices in the UK increased by 0.1% annually to an average of £265,600 in June, just a £310 rise.
Annual changes in average house prices varied greatly, with Aberdeen showing a 2.2% fall on 2023 and Belfast reporting the strongest inflation of 4.3%.
The rise in average house prices was significantly higher than in other regions, as it was followed by Manchester, where values rose by 1.8%, and Liverpool, which had a 1.4% increase.
Buyers paying most asking prices
Zoopla found that buyers were paying 96.8% of a property’s asking price, the highest level for 18 months. On average, buyers were achieving a £16,600 discount on a property’s asking price.
The firm said the market was adjusting to mortgage rates sitting around 4%, showing “positive signs of increased activity”.
Gary Howorth, sales director at Chestertons, agreed, saying: “Although there is still some uncertainty over the Bank of England’s decision to cut interest rates this week, we have seen an uplift in the number of buyers making an offer in July. The return of buyer confidence was further boosted by some lenders introducing more beneficial mortgage products with sub-4% interest rates.”
Zoopla’s data showed there was a 16% increase in the number of sales agreed due to the rise in housing stock and buyers.
More than a tenth – 12% – of homes for sale were previously rented. Zoopla said the proportion of previously rented homes put on the market had been steady for three years, as landlords reacted to higher mortgage rates and increased regulation on the private rental sector.
However, not all of these homes leave the rental sector, as around 40% are either bought by a new landlord or continue to be let out after the existing landlord decides not to sell.
A hotter housing market
Richard Donnell, executive director at Zoopla, said: “The housing market is starting to hot up after a stone cold 2023. There are clear signs of growing confidence amongst buyers and sellers, with many more homes for sale and buyers paying an increased proportion of the asking price. We expect to see more sales, but house price inflation will be kept in check by more supply and affordability pressures keeping a lid on buying power, especially across Southern England.
“While we don’t expect to see any impact from the new government, or the King’s Speech specifically, in the next 12-18 months, it is possible we will in the longer term. The housing market is essentially an extension of the UK economy. Government policies focused on economic growth that feeds into income growth will help support both homebuyers and renters. The Bank of England will have more impact on the market in the short term and much depends on the timing of the first base rate cut.”
Shekina is the deputy editor at Mortgage Solutions and commercial editor at Mortgage Solutions and Specialist Lending Solutions. She has nearly eight years of experience in the B2B publishing market, having previously covered the hospitality, retail, pet, accounting and jewellery sectors.
Shekina has worked for Mortgage Solutions and Specialist Lending Solutions for almost five years. Here, she covers the market’s breaking news stories, engages with professionals in the sector, and oversees any commercially agreed content in partnership with mortgage-related companies.
This includes presenting webinars and hosting roundtable discussions on developing themes in the mortgage sector.
She is an NCTJ-trained journalist and was nominated for the Headline Money Awards Mortgage Journalist of the Year in 2021.
In her spare time, Shekina likes to read, travel, listen to music and socialise with friends.
She currently reports on current events in the mortgage market and liaises with financial clients to produce sponsored content.
Follow her on Twitter at @ShekinaMS
