Is the housing market coming back to life?

The housing market took a knock when rocketing interest rates made large mortgages – and rising house prices – unaffordable for many. The housing market struggled with mortgage rates, which remain elevated due many factors, including market jitters over the Bank of England base rate. The wider cost of living crisis ate into buyer affordability, especially for first-time buyers.

The numbers of houses for sale shrank, and asking prices eased back from their stratospheric heights.

But that was before the beginning of spring, the traditional time for house hunters to start staring in estate agents’ windows, or these days, at their screens.

At Continuum we are looking at what is happening in the housing market now and finding that the answer is far from clear.

More sales?                                                         

The latest Zoopla House Price Index suggested transaction numbers were on the up.

In the four weeks to 17 March 2024, agreed property sales were 9% higher year-on-year, according to the data. The listings website also said the stock of homes that were on sale had increased by 20% since March 2023, with a typical estate agent having roughly 30 homes on sale.

The jump in activity was stronger in more affordable areas, the website found, with the North West and Yorkshire and the Humber regions recording leaps of 13% and 11% respectively.

Available property had also outpaced the national average in the South West (+28%) and North East (26%). London continued to lag behind the rest of the country, with growth of just 8% year-on-year.

More sellers seem to be coming back to the market. But are they achieving sales, and what about prices?

Up, down or sideways for prices?

Despite Zoopla’s talking up of increased activity from sellers, it continues to be a buyer’s market – but the message on prices is mixed.

On one hand, Zoopla reported that the fall in prices, triggered by rate increases has continued.

Prices continued to fall in southern regions of England, with the largest annual decreases recorded in the East of England (-2.3%) and the South East (-2%). But they were recorded as growing in Northern Ireland (+4.1%) and Scotland (+2.1%), with Belfast (+4.5%) and Glasgow (+2.6%) driving those rises.

Property values fell by 0.2% between February and March, the Nationwide house price index showed, although they were up 1.6% compared to the same month last year.

On the other hand, rival property website Rightmove suggested average asking prices rose by more than £4,200 (1.1%) in the month to April – although this may be due to growth at the top end of the market.

So what will happen to the housing market in the rest of 2024?

While springtime traditionally brings higher prices as demand soars, Zoopla suggested the growth in housing stock may prove to be a brake on price hikes in the next few months. The number of buyers isn’t currently matching the number of sellers, thanks mainly to the high costs of borrowing.

But things could change. With the latest set of inflation figures showing the Consumer Prices Index (CPI) dropped to 3.2% in March, experts still expect a cut in interest rates will soon be on the way.

When a path to a lower Bank of England base rate becomes clearer, it’s expected mortgages may start getting cheaper again, which should mean buyer affordability will potentially improve. 

Affordability may still be very tight, but the economy appears to be looking more positive and the property market conditions should potentially remain stable. There is plenty of choice for buyers, and many sellers will recognise that it is the right time to negotiate on price to agree a deal. 

To take advantage of the market conditions, and to move fast, you need a mortgage offer in principle as a negotiating tool. 

At Continuum we can approach the entire lending market to secure the most appropriate deal for your particular needs and ensure that you can start your house hunting armed with an offer which will show you – and your seller – exactly what you can afford to pay.

So, in the current market (as in any other) a great way to start your home purchase process with a call to us at Continuum.

Zoopla House Price Index finds market recovery ‘continuing’ | MoneyWeek

UK house prices fall for first time in three months (yahoo.com)

Rightmove: Asking prices edge closer to record peak | MoneyWeek

UK inflation cools to 3.2% – Business Insider

The information contained in this article is based on the opinion of Continuum and does not constitute financial advice or a recommendation to a suitable mortgage product or strategy, you should seek independent financial advice before embarking on any course of action.

Your home may be repossessed if you do not keep up repayments on your mortgage.

Book a Meeting

If you want to get a free consultation without any obligations, fill in the form below and we'll get in touch with you.

    Sign-up to our free weekly online publication

    How can we help you?
    Scan the code