Property sales and demand across the UK were almost a fifth higher in the final weeks of 2023 than a year earlier as sentiment improved, according to a survey.
The property website Zoopla said new sales agreed were 17% higher in December than this time last year, when higher mortgage rates hit market activity. Demand is up 19%, measured by would-be buyers contacting agents to inquire about and arrange viewings for a specific property listed on Zoopla. An increase in the number of homes for sale is increasing choice and supporting sales, it said.
Zoopla recorded an annual house price fall of 1.1% across the country this month, with a steeper drop in London, of 1.5%, to an average price of £536,800. In the capital, prices were up 0.3% in the City while Croydon, Bromley and Woking posted the biggest price declines, of 3.5%, 3.4% and 2.8% respectively.
Cash buyers accounted for a third of all sales, while property sales involving a mortgage declined by a third amid higher mortgage rates. The Bank of England raised its base rate in successive steps to 5.25% by August to tackle stubbornly high inflation, but has kept it unchanged since then.
Inflation slowed more than expected last month, to 3.9%, raising hopes of a series of rate cuts next year. Mortgage rates have already fallen, to an average of 5.95% for a two-year fix and 5.55% for a five-year fix, according to Moneyfacts.
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 overvaluation 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 realign.”
Zoopla is predicting a million property sales next year, and that first-time buyers will be the largest group of would-be buyers, accounting for two-fifths of the total.
Nathan Emerson, chief executive of Propertymark, a professional body for estate agents, said: “There is little denying the housing market has been turbulent across the last 12 months, mostly driven by high inflation and subsequently higher interest rates as a knock-on effect. We are optimistic the wider economy has hopefully reached that point of change and it is extremely positive to see sales volumes starting to gain momentum once again compared to this time last year.
“We must remain vigilant over the coming months. However, as inflation continues to dip we should start to see this translate into lower interest rates and this will be the point the UK housing market gets fully into gear once again.”