The lowest mortgage rates for 15 months is supporting a rebound in sales market activity across the UK, the latest House Price Index from Zoopla reveals.
Sales agreed and buyer demand are both up by more than a quarter over the last four weeks compared to the corresponding period a year ago as households that have held off making moving decisions over the last two years return to the market.
The number of sales agreed is 25% higher than a year ago Sales are up by over 10% across all areas and are up to 30% higher across the East Midlands and North-East.
The volume of homes for sale continues to grow as greater confidence amongst sellers sees more homes listed for sale – this includes homeowners looking to move as mortgage rates fall but also investors and second home owners selling in response to recent and possible tax changes.
The data also shows that a third – 32% – of homes for sale on the site are currently ‘chain free’ as investors and second home owners look to sell homes amidst recent tax changes and speculation around further tax changes in the upcoming October Budget. The most common ‘chain free’ homes are 2 bed houses with 41% currently listed as chain free on Zoopla. Previously rented homes account for 13% of homes for sale on Zoopla.
Many English councils are expected to double council tax for second homes in 2025. Coastal and rural postal areas popular with second home owners, such as Truro (47%), Torquay (44%), Exeter (41%), Lincoln (41%) and Bournemouth (40%), have all seen available supply increase by over 40%, as a result of these incoming tax changes. However, annual house price growth is still negative in these areas with rising supply keeping house prices in check.
Affordability continues to be a constraint on house price growth, especially in southern England. London prices have registered the biggest turnaround over the last year moving from annual price falls of -1.7% a year ago to modest price gains of +0.5% today.
Whilst house prices are lower than a year ago in the South West, South East and Eastern regions of England, in the rest of Great Britain, house price growth is higher than a year ago with prices up to 2.5% higher. Home values in Northern Ireland are 5.5% higher, having under-performed the rest of the market in recent years.
Zoopla projects that greater choice for home buyers is expected to keep house price growth in check in the months ahead. Most new listings are home-owners looking to sell and buy another home. However, not all homes are ‘brand’ new to the market. A fifth of homes currently for sale were previously on the market at some stage in the last two years.
While market conditions are improving, setting the right price is important to attract buyers. The same applies to the fifth of homes for sale that have been on the market for more than 6 months, still unsold. This explains why a similar proportion have had their asking price cut by up to 5% to attract buyers who remain price sensitive in the face of greater choice.
Over a third of sales (37%) are being agreed at more than 5% below the initial asking price, highlighting further how buyers continue to be competitive with offers. This proportion has improved from a year ago but remains at a level that suggests low single digit house price growth ahead.
Richard Donnell, executive director at Zoopla, commented: “Lower mortgage rates are delivering a much needed confidence boost to homeowners, many of whom have sat on the sidelines over the last two years. Market activity is up across the board and expectations of lower borrowing costs will continue to bring buyers and sellers into the market.
“Speculation over possible tax changes in the Budget and the impact of previous tax changes are continuing to add to the growth in the number of homes for sale. We remain in a buyers market and greater choice of homes for sale will keep house price inflation in check into 2025.”