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The housing market continues to recover steadily from the impact of rising mortgage rates and house prices are rising slowly, but Zoopla says sellers still need to be careful when pricing their home with housing supply at a seven-year high.
UK house prices have risen by an average of 1.4% so far this year and are forecast to rise by 2.5% in 2024, according to the latest data from the property portal.
Over the past decade, home prices have only fallen in three quarters: in Q4 2022 and Q3 and Q4 2023, both of which were driven by sharp increases in mortgage rates. Price growth has returned to low levels again in 2024 due to increased demand and an increase in sales and purchase agreements.
The rise in house prices so far this year has been felt in most parts of the country. Annual house price inflation rates range from -0.9% in the East of England to +5.1% in Northern Ireland. Price inflation has turned positive in London (+0.2%), while prices have fallen slightly in the South East (-0.7%), South West (-0.6%) and East Midlands (-0.1%).
Estate agents listing their homes for sale on Zoopla have an average of 33 homes unsold, the highest level since 2017 and a seven-year high. With many of these sellers also being buyers, the number of agreed sales is up 23% year-on-year.
Zoopla said it expects buyers to have more choice to help slow house price growth between 2024 and 2025.
Property prices are still dealing with the impact of rising borrowing costs in some areas, with house prices continuing to record small declines on both a quarterly and annual basis (year-on-year price change) in postal areas such as Taunton (TA, -2.0%), Dartford (DT, -1.3%), Enfield (EN, -1.1%) and Harrogate (HG, -1%).
House prices are rising faster than the national average in lower-cost and affordable housing markets close to England’s larger cities, such as Wolverhampton (WV, 3%), Oldham (OL, 2.8%) and Wakefield (WF, 2.7%).
House prices are rising even faster across the Scottish Borders, from Dumfries and Galloway (DG, 4.4%) to Galashiels (TD, 3.1%), and in Falkirk (FK, 3.1%) north and east of Glasgow.
While market activity indicators are rising and price inflation is positive, Zoopla warned that it is important for sellers, particularly those seriously considering moving, to remain realistic about pricing.
“Buyers remain price-sensitive as rising mortgage rates have eroded their purchasing power. This is gradually being offset by accelerating income growth, but there is still a way to go before affordability recovers fully. This is why around 20% of homes listed on Zoopla reduced their asking price by more than 5% in August in a bid to attract more buyers.”
Homes that require an asking price reduction take more than twice as long to sell as homes that don’t have their asking price reduced. If you don’t reduce your asking price, it takes about one month (28 days) for a sale to be agreed upon, but if you reduce your asking price by 5% or more to attract demand, it takes more than two months (73 days) to sell. A high percentage of homes that have their asking price reduced by 5% or more never sell.
Zoopla says with more sellers entering the market as we move into the post-holiday autumn period, it’s vital for serious sellers to get the asking price right the first time to ensure a timely sale.
Richard Donnell, executive director at Zoopla, said: “The sales market continues to gain momentum as mortgage rates fall and more sellers feel confident putting their homes on the market. Buyers have much more choice, which will likely result in more sales but more subdued price growth.”
“Buyers have less purchasing power than they did two or three years ago and remain price sensitive, which means sellers can’t afford to get ahead of themselves about where they want to set the right price for their home. If they have to drop the asking price by more than 5%, their home may take twice as long to sell or may not sell at all.”
Do real estate agents overprice homes to get orders?
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