Good news for sellers as Zoopla predicts house prices will climb by almost £4,000 this year – but buyers will need deeper pockets.

Property website Zoopla has revealed that house prices are expected to rise by 1.5% in 2024, adding an average of £3,900 to the value of a typical home. This comes despite their own data suggesting that houses are currently overvalued by 8%, meaning they cost more than what’s considered affordable based on incomes and mortgage rates.

The average house price currently stands at £264,900 according to Zoopla. While this figure has remained relatively stable over the past year, Zoopla suggests this apparent stability masks regional variations, with some areas experiencing price increases while others see declines.

Why are prices rising if homes are overvalued?

Zoopla’s prediction of rising prices is based on the assumption that incomes will increase, allowing people to afford higher house prices. Additionally, mortgage rates are expected to remain stable at around 4.5%, or even potentially decrease if the Bank of England lowers the base rate later this year.

Richard Donnell, executive director at Zoopla, explains: “The housing market continues to adjust to higher borrowing costs through modest house price falls and rising incomes.” He further highlights that buyers are finding ways to cope with higher costs by opting for longer mortgage terms.

Regional Differences

Zoopla’s data also reveals significant regional variations in house price trends:

• Biggest Falls: The East of England saw the largest price drop over the past year (-1.4%), followed by the South East (excluding London) at -1% and the South West at -0.9%.
• Biggest Rises: Northern Ireland experienced the most substantial price growth at 3.3%, while the North West and North East of England saw increases of 1.5% and 1.4% respectively.

What does this mean for buyers and sellers?

The predicted price increase, despite houses being deemed “overvalued,” suggests a continuing seller’s market, particularly in regions experiencing the most significant growth. However, buyers may find some comfort in the increasing availability of homes for sale, which could lead to slightly less intense competition.

While Zoopla’s analysis offers valuable insight into current market trends, it’s crucial to remember that individual circumstances and local market variations will always play a role in buying or selling a property.