The number of homes sold has risen by 12% compared to last year, according to the latest data from Zoopla. This increase in sales agreements comes despite a stagnant growth in house prices, which remains nearly flat at -0.2%. The data suggests a year of recovery and potential growth, with Zoopla projecting a notable increase in home sales from 1 million in 2023 to 1.1 million in 2024. This optimistic forecast hinges on the sellers’ willingness to maintain realistic pricing strategies.

Mortgage Repayments The Sticking Point

While the market shows signs of life in sales volumes, mortgage costs present a challenge. Home buyers face mortgage repayments that are 61% higher than they were three years ago. In real terms, this means annual mortgage costs have soared from £7,100 to £11,400, driven primarily by the rise in mortgage rates from below 2% in early 2021 to around 4.5% now. Additionally, house prices themselves have jumped by 13% over the past three years, contributing further to the increased financial burden on buyers.

Regional disparities are stark: In southern England, the cost of mortgage repayments has surged by as much as 70% since 2021, with Londoners experiencing an increase of £7,500 in annual mortgage costs. Conversely, regions like the North East have seen more modest increases.

Market Pressures and Price Adjustments

The affordability crunch, combined with slower income growth and rising living costs, is keeping a lid on house price growth, particularly in southern England. Zoopla’s analysis indicates that 64% of homes are in areas still seeing year-on-year price declines, although the extent of these declines tends to be modest, mostly ranging between 0% and -3%.

Interestingly, while southern England shows nearly universal declines in house prices, there are signs of stabilisation or even improvement in other regions. For example, the North East, the UK’s most affordable region with an average house price of £142,000, now reports no areas with annual price falls.

Expert Insights

Richard Donnell, Executive Director at Zoopla, notes that the continued rebound in sales is supported by slightly lower mortgage rates, an improvement in consumer confidence, and a greater selection of homes on the market. Donnell emphasises the need for continued price stability to nurture this growth. “The market is adjusting to higher borrowing costs,” he explains, adding that, “What we need is continued price stability which will create the environment for continued growth in sales and home moves.”