House prices are expected to rise over the second half of the year across the UK, according to a forecast, with the market bolstered by more people selling their homes. Prices are likely to increase by 2% towards the end of 2024, Zoopla has predicted.
The improved outlook for the housing market was the result of an increased number of homes for sale, the property portal said. The number of sales agreed in the four weeks to 21 July was 16% higher than the same period a year ago and the average estate agent had more homes for sale than at any point in the past six years.
Buyers in the UK are now paying 96.8% of the asking price – the highest figure for 18 months, according to Zoopla’s house price index. This equates to properties selling for an average of £16,600 below their asking price in June 2024.
Figures from the Bank of England published on Monday showed net mortgage approvals – which indicate future levels of borrowing – remained largely unchanged in June from a month earlier, in a sign of the property market treading water before the general election and Thursday’s rate decision.
Richard Donnell, an 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 among buyers and sellers with many more homes for sale and buyers paying an increased proportion of the asking price.”
He added that Zoopla expected 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”.
Nothing in the king’s speech or the new government’s plans was likely to have a material impact on the outlook for the market over the next 12-18 months, according to Donnell. However, he said it could in the “longer term”.
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“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,” he said.
Experts are split on whether there will be an interest rate cut on 1 August. However, the Bank is widely expected to begin reducing its 5.25% base rate before the end of 2024.
Simon Gerrard, a former president of the National Association of Estate Agents, said: “Inflation has held steady at the Bank of England’s target of 2%, so there is a strong chance that the base interest rate will come down in August or September, which will fire the gun on property searches that have been on hold.”
The housing market is adjusting to higher mortgage costs after interest rates began rising in 2022. While house prices increased by only 0.1% in the past 12 months (to £265,600 on average), they rose across all regions of the UK in the first half of 2024.
Zoopla said the existence of more sellers naturally meant more buyers who appeared motivated by a range of reasons. It noted that many would-be movers were looking for a larger home, usually to accommodate a growing family. The data showed an increasing number of buyers were having to look farther afield to get the home and features they were seeking.