Shares in UK housebuilders are on the rise following positive news from property website Zoopla. Their latest house price index reveals that house prices bounced back in July, reversing a dip seen in June. The index also shows that buyer demand and sales agreements have surged in 2024 so far.
House Price Growth
- House prices have increased by 1.4% during the first seven months of 2024.
- Zoopla predicts a 2.5% rise in house prices by the end of the year.
- However, compared to July 2023, the annual growth rate is a modest 0.5%, reflecting the price falls experienced in the latter half of last year.
Buyer Demand and Sales Agreements Jump
- Zoopla’s data highlights a remarkable 20% increase in buyer demand in 2024.
- Sales agreements have also seen a significant leap of 23% during the same period.
Mortgage Rates on the Decline
- These positive market changes occurred even before the Bank of England’s recent interest rate cut of 0.25% on 1 August.
- Mortgage rates had already been falling in anticipation of the rate cut.
- The average two-year fixed-rate mortgage has decreased from 5.97% at the end of June to 5.58% currently, according to Moneyfacts.
Richard Donnell, director at Zoopla, commented: “Momentum in the sales market continues to build as mortgage rates drift lower and more and more sellers gain the confidence to list their home for sale. Buyers have much greater choice which will support sales numbers, but this will keep prices rises in check.”
Housebuilder Shares Respond Positively
Following the release of Zoopla’s data, shares in several housebuilders experienced a rise:
Berkeley Group Holdings PLC: 0.5% rise
Crest Nicholson: 1.2% rise
Persimmon PLC: 0.9% rise