Zoopla: Property market is improving but buyers remain price-sensitive

Lower mortgage rates gave the housing market a boost in February with supply and sales all moving higher, Zoopla claims.

The portal’s latest House Price Index shows sales agreed were up 15% annually in February while stock for sale has risen by 21%.

Zoopla said this was down to falling mortgage rates boosting buyer purchasing power.

Sales momentum has been recovering for five months, prompting the property website to predict that the market is on track for 10% more sales in 2024 than last year at 1.1m.

But it cautioned that asking price reductions, while lower than last year, remain above average, as buyers remain cost sensitive.

Asking price reductions of 5% or more are greatest in the South East and East of England, Zoopla said.

The average estate agent is agreeing 6 new sales a month up from 5.2 this time last year.

That is feeding into prices, Zoopla said, with average values down 0.5% annually to £263,600.

It suggests that a “three-speed” housing market has emerged, with the Eastern, South East and South West regions, outside London, registering the largest annual falls, London remaining most expensive and the rest of the UK seeing limited declines.

Richard Donnell, executive director at Zoopla, said: “The housing market has proved very resilient to higher mortgage rates and cost of living pressures. More sales and more sellers shows growing confidence amongst households and evidence that 4-5% mortgage rates are not a barrier to improving market conditions.

“The momentum in new sales being agreed has been building for the last 5 months and the sales market is on track for 1.1m sales over 2024 supported by new sellers coming to the market. While sales are set to increase we don’t expect house price growth to accelerate further in 2024.”

It comes as the latest member data from Propertymark suggests buyer registrations rose 120% between December 2023 and January 2024 - albeit boosted by the quieter Christmas period - and new supply was up 79% to eight listings per branch.

But Nathan Emerson, chief executive of the agency trade body, warned: "There remains a mismatch between valuations and market expectations, with most members noting that properties are still selling at below asking price."