UK house prices are on track to be up to 2% higher by the end of the year with the market being helped by people wanting to sell their homes despite higher mortgage costs still deterring some would-be buyers.
The latest house price index from Zoopla reveals buyers in the UK are now paying 96.8% of the asking price – the highest figure for 18 months – meaning properties are selling for an average of £16,600 below their asking price in June 2024.
The result is the emergence of a housing market at its most balanced for five years with buyers still adjusting to 4%+ mortgage rates with positive signs of increased activity.
More sellers continue to list homes for sale and more sales are being agreed and buyers are paying a greater proportion of the asking price as confidence improves.
Throughout the UK house prices are rising slowly across all regions reversing the price falls recorded over 2023.
Over the last 12 months UK house prices edged 0.1% higher, increasing by just £310 to £265,600.
However, Richard Donnell, executive director of research at Zoopla, warns that affordability remains a major constraint on market activity, especially in southern England.
And he says that while small rises in house prices can help motivate people to list their home for sale a return to faster house price inflation would be most unwelcome.
He explains: “The housing market requires a 12-to-24-month window where incomes rise faster than house prices to help reset affordability. Incomes are set to rise 4.5% in 2024 and we would also expect incomes to rise faster than house prices in 2025.”
One important feature of the housing market at present, he goes on to say, is that there
are more homes for sale than at any point in the last six years.
“This is improving choice for home buyers and supporting more sales. The average agent has 33 homes for sale, 16% higher than a year ago and above the longer run average of 25.
“More supply means more sellers, most of whom are also buyers, motivated to move by a range of reasons. Many would-be movers are upsizers who are looking further afield to get the home and features they are looking for, while also seeking value for money.”
Zoopla’s research also reveals that one in 10 (12%) homes for sale were previously rented, a proportion that has held broadly steady over the last three years.
Tax changes introduced in 2016, greater regulation of rented property and higher mortgage rates have led to more landlords selling.
Donnell adds: “We expect continued modest growth in house prices, which will be greater outside the south of England where affordability is less of a constraint on price inflation. Sales remain on track for 1.1m in 2024, still 10% lower than the 20-year average.
“The timing of the first base rate cut is important. It will deliver a boost to consumer confidence and market activity rather than leading to any major reduction in mortgage rates for new home buyers.
“Nothing in the King's Speech or the Government's plans has any material impact on the outlook for the market in the next 12-18 months.
“Economic growth and increasing home building will benefit homebuyers and renters in the long run. However, affordability and access to home ownership and rented housing remain challenges for a significant proportion of households on lower incomes.”
Freshwater property values growing at twice the rate
Elsewhere, new data analysis from estate agent Yopa reveals that house prices near lakes, lochs, and reservoirs are growing at more than double the rate of the wider UK average.
The agency analysed the annual house price change (May 2023 - May 2024 - latest available) for properties located within arm’s reach of 38 of the UK’s major lakes, lochs, and reservoirs to see how freshwater property performance compares to that of the wider UK market.
Between May 2023 and May 2024, the average UK house price grew from £278,941 to £285,201 - an annual increase of 2.2%.
Homes located next to lakes, lochs, and reservoirs have wildly outperformed this national performance with an average growth rate of 5.5% - more than double that of the general UK market. The average lakeside property has seen its value rise from £213,384 to £224,134.
The biggest waterside price growth has been recorded in Wales where the value of homes located next to Llyn Cowlyd have grown by a stunning 13.1% over the past 12 months to reach a current average price of £206,764.
By Scotland’s Loch Shin, prices have grown by 12.9% to hit an average of £182,331, and prices next to Scotland’s Loch Awe have increased by 11%.
The remainder of the top ten lakes, lochs, and reservoirs to have seen the highest annual price growth is a list dominated by locations in Wales.
Llyn Brenig has seen a price increase of 10.7%, followed by England’s Coniston Water (10.5%), Lake Vyrnwy (9.6%), Llangorse Lake (9.5%), Clywedog (9.5%), England’s Derwentwater (7.9%), and Llyn Cwellyn (7.9%).
Despite the strong price boost that comes with living lakeside, three of the 38 lakes, lochs, and reservoirs studied have actually seen prices fall in the past year.
They are Llyn Celyn (-2.8%) and Llyn Tegid (-2.8%), both in Wales, followed by Derwent Reservoir in England (-2.7%).
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