Zoopla: Property market heading for 1.1m sales but prices will be lower

The worst of the pricing adjustment in response to higher mortgage rates appears to be behind us, Zoopla has claimed.

The portal’s latest House Price Index chimes with Nationwide’s data released yesterday, suggests price growth will slow further over 2023 and dip into negative territory but highlights that transaction volumes continue to grow. 

Demand for homes reached its highest level this year after the Easter break and is 14% higher than 2019 levels but still 42% down on this time last year, according to Zoopla.

Agency stock is now 66% higher than a year ago while the number of new sales being agreed is 6% up on 2019 but in line with the five-year average, the portal said.

Based on this, Zoopla claims, the market remains on track for 500,000 sales in the first half of 2023 and could reach 1.1m across the year if sellers continue to be realistic on pricing.

The number of new sales agreed is strongest in Scotland, the North East and London, which Zoopla’s report said reflects more attractive affordability levels and the capital having recorded weak price inflation over the past six years which has improved affordability.

Annual house price growth slowed to 3% in March 2023, compared with 9.3% this time last year, the index found.

There are early signs that the level of monthly price reductions are now reducing and the main adjustment in pricing is behind us, Zoopla said, adding that its index is likely to register low negative annual growth by the summer and end the year, down 1%.

The research also found that first-time buyers were the largest buyer group in 2022 and look set to be a strong source of new sales again in 2023.

Three-bed homes remain the most in-demand property for this group, at 40% but there is a shift in demand towards two-bed flats.

It comes as income to buy a typical three-bed first-time buyer home has increased by £7,350 since 2020 but this varies by geography, Zoopla claims.

Richard Donnell,  executive director at Zoopla said: “Housing market conditions continue to improve as buyers return to the market and more sales are agreed. 

“House prices are posting very modest falls and are expected to be just 1% lower by the end of the year. The worst of the pricing adjustment appears to be behind us. 

“We expect first time buyers to have another strong year in 2023 having been the largest buyer group last year. They need more income to buy but are starting to look for smaller homes and get away from rapid growth in rents.”