The Zoopla house price index revealed the number of homes available on the market is at its highest point in six years.
Agents now have an average of 33 homes on their books. It said the greater level of choice for buyers was helping sales go through, as buyers tend to be motivated by more sellers in the market.
It is also seeing many upsizers, those looking for a larger home, usually to accommodate for a growing family.
In total, Zoopla said the increased supply has resulted in the number of sales agreed being 16% higher than a year ago, and 22% above pre-pandemic levels.
More than a tenth – 12% – of homes for sale were previously rented. Zoopla said the proportion of previously rented homes put on the market had been steady for three years, as landlords reacted to higher mortgage rates and increased regulation on the private rental sector.
However, not all of these homes leave the rental sector, as around 40% are either bought by a new landlord or continue to be let out after the existing landlord decides not to sell.
Overall, buyers were also paying 96.8% of a property’s asking price, the highest level for 18 months. On average, buyers were achieving a £16,600 discount on a property’s asking price.
Meanwhile, the firm said the market was adjusting to mortgage rates sitting around 4%, showing “positive signs of increased activity”.
And despite the general election and potential base rate cut, house prices are expected to climb.
House prices increased by just 0.1% in the past 12 months (£310 to £265,600 on average) across all regions of the UK over the first half of 2024.
However, Zoopla suggested values would “increase slowly but steadily” over the second half of the year, and are on track for a 2% increase in 2024.
‘Housing market hotting up’
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 homebuyers 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.”
Chris Little, chief revenue officer of Finova, said: “After a fairly flat May, it should be no surprise that the general election has supercharged market activity. As prices increase and more homes go on for sale, the market temperature is rising upwards.
“The warm sentiment might have been stoked by the Government’s plans to tackle the market’s long-standing affordability problem with the single biggest housebuilding regime in a century.”
Gary Howorth, sales director at Chestertons, added: “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.”
This article was first published on Your Mortgage‘s sister site, Mortgage Solutions. Read: House prices set to rise 2% in 2024 – Zoopla
