Zoopla: Sales recovering but houses still too expensive

The final weeks of 2023 have recorded above average levels of new sales with a 17% increase compared to the same time last year, according to Zoopla.

The portal’s latest House Price Index found that demand is almost one fifth higher than last year when the higher mortgage rates first started to hit market activity. 

An increase in available supply of homes for sale is also boosting choice – up 25% annually.

As a result, Zoopla has recorded a 1.1% annual drop in average house prices for November to £264,500, down from 7.2% a year ago.

Zoopla said those using cash to purchase a property are on track to account for a third of all sales in 2023 with mortgaged sales set to be 30% lower as higher mortgage rates hit demand. 

Despite the affordability challenges facing first time buyers due to high mortgage rates, Zoopla predicts this cohort will be the largest group of would-be buyers in the next two years as the rapid growth in rent continues to motivate them.

Zoopla data shows that buyers are looking further afield for more affordable homes.

Its research found that the average distance buyers look to move is 4.3 miles, while almost half of would-be movers in southern regions are looking to move 10 or more miles in the search of their next home as they seek space and better value. 

The modest decline in house prices over the year means UK housing still looks 10-15% over-valued at the end of 2023, Zoopla said.

It suggests this position will improve during 2024 as incomes rise and house prices drift 2% lower over the year. Sales volumes are expected to hold steady at 1 million sales completions over 2024. 

Richard Donnell, executive director at Zoopla, said:  “The housing market has been more resilient than many expected over 2023 but it hasn’t been a surprise to us. Mortgage regulations introduced in 2015 have stopped an over-valuation of housing which is why the decline in house prices has been modest over the year. 

“House price falls have been concentrated in the south and midlands while prices are still slightly higher over the year in Scotland and Northern Ireland. UK housing still looks expensive by historic standards which is why we expect UK house prices to fall a further 2% over 2024 as prices and incomes re-align.“

Commenting on the report, Matt Thompson, head of sales at Chestertons, said: “December tends to be a quieter time of year in terms of property transactions but buyers have been more motivated this month to continue their search.

"Built up demand caused by this year’s economic uncertainty is a key reason for this delay in buyer activity and indicates that 2024 will start off with a very active property market.”