The latest House Price Index from Zoopla reveals that the housing market is set to finish 2024 strongly with more sales being agreed ahead of the stamp duty deadline.
At the same time, buyers are becoming more cautious about what they pay for homes as mortgage rates drift higher and households consider the impact of the Budget on the outlook for the economy and jobs.
Buyers and sellers returned to the market in 2024 having delayed moving decisions in the face of higher mortgage rates. More homes for sale boosted choice and sales have grown year on year with the last four weeks seeing sales agreed 23 per cent up on last year as buyers try to agree deals ahead of the stamp duty changes from April 2025.
There are 283,000 sales agreed working their way through to completion in the first half of 2025, this is the largest sales pipeline in four years, worth £104 billion. This is an increase of 30 per cent compared to this time last year.
More sales have also helped house prices return to growth in 2024. Annual house price growth was 1.9 per cent in the 12 months to November 2024, compared to -1.2 per cent a year ago.
The average UK house price stands at £267,500. House price growth ranges from 0.7 per cent in the South East to 6.8 per cent in Northern Ireland and 3.5 per cent in the North West region.
Buyers have become more price-sensitive in recent weeks in the wake of the Budget and growing uncertainty over the outlook for mortgage rates which have drifted higher.
This means that buyers are now agreeing sales at 3.6 per cent below the asking price. Over the summer of 2024, buyers were more confident as mortgage rates fell, agreeing purchase prices that were, on average, 3.2 per cent below the asking price.
The size of the gap between asking prices and agreed purchase prices is a lead indicator of house price growth. The gap between the asking and agreed sales price peaked at 4.6 per cent in late 2023 resulting in modest price falls, while in 2021 during the pandemic buyers had to pay the asking price to secure a sale.
It remains a buyer’s market and signs of increased caution amongst home buyers will keep UK house price growth in check over 2025.