Zoopla: 'Asking price discounts narrow as property market heats up'

The UK housing market is heating up, with buyers now agreeing to pay 96.8% of asking price, Zoopla claims.

The figure is the highest for 18 months and an average of £16,600 below asking price.

It comes as the latest Zoopla House Price Index for June shows renewed confidence in the second half of the year amid falling inflation and hopes of an interest rate cut.

The number of sales agreed is 16% higher than a year ago, according to the report, and 22% above pre-pandemic levels.

Additionally, the report shows the average agent has more homes for sale than at any point in the past six years. 

While house prices increased by just 0.1% in the past 12 months to £265,600 on average, Zoopla said, house prices have increased across all regions of the UK over the first half of 2024. 

There are regional variations though, Zoopla said.

For example, while Belfast has seen a 4.3% increase and Scotland has seen an overall increase of 1.4%, South East England saw a fall of 1%, South West England a drop of 0.7% and in the East of England, prices are down 1.2%. 

Zoopla expects UK house prices to increase slowly but steadily over the second half of 2024, on average increasing towards around 2% by the end of the year, helped by more supply and more willing buyers.

Richard Donnell, executive director at Zoopla, said: “The housing market is starting to hot up after a stone cold 2023. There are clear signs of growing confidence amongst buyers and sellers with many more homes for sale and buyers paying an increased proportion of the asking price. We expect to see more sales but house price inflation will be kept in check by more supply and affordability pressures keeping a lid on buying power, especially across southern England.

“While we don’t expect to see any impact from the new Government, or the King’s Speech specifically, in the next 12-18 months, it is possible we will in the longer term. 

“The housing market is essentially an extension of the UK economy. Government policies focused on economic growth that feeds into income growth will help support both home buyers and renters. The Bank of England will have more impact on the market in the short term and much depends on the timing of the first base rate cut.”

Commenting on the report, Gary Howorth, sales director at Chestertons, said: “Although there is still some uncertainty over the Bank of England’s decision to cut interest rates this week, we have seen an uplift in the number of buyers making an offer in July. 

"The return of buyer confidence was further boosted by some lenders introducing more beneficial mortgage products with sub 4% interest rates. As many considered the result of the General Election forgone and with Labour suggesting an increase in capital gains tax, we also saw more homeowners wanting to sell, contributing to an overall busier than usual month of July for the property market.”

Nathan Emerson, chief executive of Propertymark, added: “It is fantastic to see further positivity and confidence returning to the housing market, and now that the General Election is out of the way and we have a promise of 1.5m new homes across the next parliamentary term, we should start to see even more confidence and affordability across the sector.

“It is vital that the new UK Government takes supply issues seriously, as this will help stabilise house prices in the long-term. Propertymark is keen to see a ‘connected communities’ approach applied with the supply of new homes and one that delivers the right homes in the right areas at the right time, while paying extreme attention to ensuring available land is utilised ahead of any move on greenbelt areas.”