UK house prices set for 2% rise as market rebounds

After a chilly 2023, the UK’s housing market is showing clear signs of warming up in 2024, with increased buyer activity and a growing number of homes for sale, one house price index reveals.

According to Zoopla, house prices climbed by a modest 0.1% over the past year to £265,600, but it anticipates a steady increase of around 2% by year’s end.

This optimism stems from a surge in property listings – the highest in six years – which is fuelling a rise in sales.

Sales agreements have jumped 16% year-on-year, surpassing pre-pandemic levels by 22%.

Buyers are now willing to pay 96.8% of asking prices – the highest in 18 months – demonstrating renewed confidence.

‘Housing market is starting to hot up’

Richard Donnell, the 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.”

He adds: “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.”

Economic growth will feed into income growth

Mr Donnell says that government policies focused on economic growth will feed into income growth to help support both home buyers and renters.

He also says that the Bank of England will have a bigger impact on the market in the short term – and a lot depends on the timing of the first base rate cut.

However, the housing market’s recovery is uneven as regions like Belfast and Scotland have seen price increases, while southern England grapples with affordability issues, leading to falling prices.

House prices also fell in south west England and in the East of England.

‘We should start to see even more confidence’

Nathan Emerson, the chief executive of Propertymark, said: “It is fantastic to see further positivity and confidence returning to the housing market, and now that the general election is out of the way and we have a promise of 1.5m new homes across the next parliamentary term, we should start to see even more confidence and affordability across the sector.

“It is vital that the new UK government takes supply issues seriously, as this will help stabilise house prices in the long-term.”

He added: “Propertymark is keen to see a ‘connected communities’ approach applied with the supply of new homes and one that delivers the right homes in the right areas at the right time, while paying extreme attention to ensuring available land is utilised ahead of any move on greenbelt areas.”

‘Decision to cut interest rates’

Gary Howorth, the sales director at Chestertons, said: “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.”

He adds: “As many considered the result of the General Election forgone and with Labour suggesting an increase in Capital Gains Tax, we also saw more homeowners wanting to sell, contributing to an overall busier than usual month of July for the property market.”

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