UK property supply hits eight-year high
There are more homes for sale now than at any point over the past eight years but almost a third are from sellers relisting their property, Zoopla data suggests.
Home buyers have been deterred from the housing market in recent months due to high mortgage rates but as inflation starts to settle and hopes of an interest rate cut rise, buyers and sellers appear more confident.
Zoopla’s latest House Price Index suggests supply is rising, making it a good time for those looking to buy a property and it could even ensure house prices remain affordable.
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The property website’s research suggests that as of 19 May, the level of property stock for sale is up 20% annually and 25% higher in value terms.
Sales agreed are also running 13% higher than this time last year, suggesting that buyers are taking advantage of recent mortgage rate cuts.
Supply is growing faster, according to Zoopla, boosting choice for home buyers.
Richard Donnell, executive director at Zoopla, suggests that the extra supply will keep house price growth low and adds that the general election is unlikely to have a major impact on the property market.
“The growth in the supply of homes for sale is evidence of renewed confidence amongst homeowners, some of whom delayed moving decisions in 2023,” he says.
“The quarterly rate of house price inflation has picked up in recent months as more sales are agreed and prices firm. “
Housing market springs into action
The property market usually wakes up around the warmer spring months, especially as buyers are more willing to view homes when it isn’t raining and have more daylight hours to choose from.
There are now more homes for sale than at any point in the past eight years, as sellers return to the market in growing numbers, Zoopla said.
The average estate agent has 31 homes for sale.
Most homes for sale are new-to-market. However, Zoopla highlights that almost a third of listings were also on the market in 2023 but failed to find a buyer.
“This is not surprising, as demand for homes fell over the second half of the year as mortgage rates jumped higher,” says Zoopla.
Meanwhile, two-fifths of these homes that had been on the market in 2023 have had their asking price cut by more than 5% to attract demand.
The South West of England has recorded a 33% increase in homes for sale compared to last year, with an above-average increase in the expansion in four-bed homes, Zoopla says.
This is attributed to tax changes for holiday lets and the prospect of double council tax for second homes, which may be encouraging holiday home owners to sell.
Sales volumes are also continuing to recover back towards the long-run average, according to Zoopla.
There are regional variations though. The level of sales agreed have grown 22% across the North East but are up by just 1% in Wales
Matt Thompson, head of sales at estate agency Chestertons, says there has been a clear uplift in the number of homeowners putting their property up for sale to benefit from the heightened buyer demand associated with the spring market.
“Despite the influx of sellers, demand still outweighs supply,” he says.
“The property market will therefore continue to be competitive but as supply levels increase, some sellers may be more willing to reduce their asking price in order to secure a sale.”
Is now a good time to buy a property?
An interest rate cut over the summer could bring down the cost of borrowing, making homes more affordable for buyers and increasing demand in the housing market.
Another challenge is the general election though.
There are currently 392,000 homes in the sales pipeline working their way through to completion over 2024, says Zoopla.
This is 3% higher than this time last year and the property website doesn’t expect to see buyers already in the process of progressing to sales completions pulling out.
Many buyers are already in the process having delayed moves when mortgage rates were higher last year.
Zoopla predicts that the election announcement will stall the pace at which new sales are being agreed in the coming weeks but most buyers well into the process will ideally want to push through and agree sales now.
“Those who are earlier in the process may look to delay decisions until the autumn after the election is over,” says Zoopla.
“Overall, we don’t see the election having as big an impact as in previous years, particularly as there is not a huge divide in policy between the two main parties.”
Will house prices fall in 2024?
Many commentators had expected house prices to decline this year due to affordability pressures.
Increasing supply of property could also bring values down.
Halifax has predicted that average prices will fall by between 2% and 4% this year while Nationwide forecasts a single digit decline.
But if interest rates are cut and the cost of borrowing falls, buyer demand could actually increase and may push up property prices.
Zoopla’s latest index suggests prices fell 0.1% annually in April 2024 to £264,300 and it expects prices to remain flat over the year.
Estate agency brand Knight Frank had previously predicted a 4% price drop for 2024 but has revised that to a 3% rise.
“Growing supply is one reason that UK house price growth this year will be limited to low single digits,” says Tom Bill, head of UK residential research at Knight Frank.
“However, the main obstacle for buyers is stubborn services inflation, which is keeping mortgage rates high.
“Asking prices therefore need to reflect the fact that buyers have more choice and tighter budgets. General elections don’t tend to impact mainstream property markets and if anyone is attempting to guess what happens next to house prices, I would suggest looking closely at the next inflation data rather than the manifestos.”
